Correlation Between DFS Furniture and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and AstraZeneca PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DFS Furniture and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and AstraZeneca PLC, you can compare the effects of market volatilities on DFS Furniture and AstraZeneca PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DFS Furniture with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and AstraZeneca PLC.
Diversification Opportunities for DFS Furniture and AstraZeneca PLC
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and AstraZeneca is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC and DFS Furniture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DFS Furniture PLC are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of DFS Furniture i.e., DFS Furniture and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between DFS Furniture and AstraZeneca PLC
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.21 times more return on investment than AstraZeneca PLC. However, DFS Furniture is 1.21 times more volatile than AstraZeneca PLC. It trades about 0.15 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.12 per unit of risk. If you would invest 12,000 in DFS Furniture PLC on September 14, 2024 and sell it today you would earn a total of 2,400 from holding DFS Furniture PLC or generate 20.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DFS Furniture PLC vs. AstraZeneca PLC
Performance |
Timeline |
DFS Furniture PLC |
AstraZeneca PLC |
DFS Furniture and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DFS Furniture and AstraZeneca PLC
The main advantage of trading using opposite DFS Furniture and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, AstraZeneca PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.DFS Furniture vs. Berkshire Hathaway | DFS Furniture vs. Hyundai Motor | DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Samsung Electronics Co |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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