Correlation Between Experian PLC and Experian Plc

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

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

Diversification Opportunities for Experian PLC and Experian Plc

0.77

Correlation Coefficient

Experian PLC  Experian Plc

Poor diversification

The 3 months correlation between Experian and Experian is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Experian PLC and Experian plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc PK and Experian 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 Experian PLC are associated (or correlated) with Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc PK has no effect on the direction of Experian PLC i.e., Experian PLC and Experian Plc go up and down completely randomly.

Pair Corralation between Experian PLC and Experian Plc

Assuming the 90 days horizon Experian PLC is expected to under-perform the Experian Plc. In addition to that, Experian PLC is 1.22 times more volatile than Experian plc PK. It trades about -0.01 of its total potential returns per unit of risk. Experian plc PK is currently generating about 0.01 per unit of volatility. If you would invest  4,788  in Experian plc PK on September 3, 2024 and sell it today you would lose (5.00) from holding Experian plc PK or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Experian PLC  vs.  Experian plc PK

Experian PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Experian PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Experian plc PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian plc PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Experian Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Experian PLC and Experian Plc

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

The idea behind Experian PLC and Experian plc PK 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.