Correlation Between Diageo PLC and Intuitive Investments

Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Intuitive Investments 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 Diageo PLC and Intuitive Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diageo PLC and Intuitive Investments Group, you can compare the effects of market volatilities on Diageo PLC and Intuitive Investments 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 Diageo PLC with a short position of Intuitive Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Intuitive Investments.

Diversification Opportunities for Diageo PLC and Intuitive Investments

0.62

Correlation Coefficient

Diageo PLC  Intuitive Investments

Poor diversification

The 3 months correlation between Diageo and Intuitive is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC and Intuitive Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Investments and Diageo PLC 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 Diageo PLC are associated (or correlated) with Intuitive Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Investments has no effect on the direction of Diageo PLC i.e., Diageo PLC and Intuitive Investments go up and down completely randomly.

Pair Corralation between Diageo PLC and Intuitive Investments

Assuming the 90 days trading horizon Diageo PLC is expected to generate 1.13 times more return on investment than Intuitive Investments. However, Diageo PLC is 1.13 times more volatile than Intuitive Investments Group. It trades about 0.0 of its potential returns per unit of risk. Intuitive Investments Group is currently generating about -0.16 per unit of risk. If you would invest  249,750  in Diageo PLC on September 25, 2024 and sell it today you would lose (400.00) from holding Diageo PLC or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Diageo PLC  vs.  Intuitive Investments Group

Diageo PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diageo PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Diageo PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Intuitive Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Investments Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Diageo PLC and Intuitive Investments

The main advantage of trading using opposite Diageo PLC and Intuitive Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Intuitive Investments 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 Intuitive Investments will offset losses from the drop in Intuitive Investments' long position.

The idea behind Diageo PLC and Intuitive Investments Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.