Correlation Between Fevertree Drinks and Safestore Holdings
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Safestore Holdings 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 Fevertree Drinks and Safestore Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Safestore Holdings Plc, you can compare the effects of market volatilities on Fevertree Drinks and Safestore Holdings 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 Fevertree Drinks with a short position of Safestore Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Safestore Holdings.
Diversification Opportunities for Fevertree Drinks and Safestore Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fevertree and Safestore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Safestore Holdings Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safestore Holdings Plc and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Safestore Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safestore Holdings Plc has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Safestore Holdings go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Safestore Holdings
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 1.06 times more return on investment than Safestore Holdings. However, Fevertree Drinks is 1.06 times more volatile than Safestore Holdings Plc. It trades about -0.07 of its potential returns per unit of risk. Safestore Holdings Plc is currently generating about -0.27 per unit of risk. If you would invest 76,978 in Fevertree Drinks Plc on September 15, 2024 and sell it today you would lose (6,078) from holding Fevertree Drinks Plc or give up 7.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.48% |
Values | Daily Returns |
Fevertree Drinks Plc vs. Safestore Holdings Plc
Performance |
Timeline |
Fevertree Drinks Plc |
Safestore Holdings Plc |
Fevertree Drinks and Safestore Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fevertree Drinks and Safestore Holdings
The main advantage of trading using opposite Fevertree Drinks and Safestore Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Safestore Holdings 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 Safestore Holdings will offset losses from the drop in Safestore Holdings' long position.Fevertree Drinks vs. Rightmove PLC | Fevertree Drinks vs. Bioventix | Fevertree Drinks vs. VeriSign | Fevertree Drinks vs. Games Workshop Group |
Safestore Holdings vs. MT Bank Corp | Safestore Holdings vs. Associated British Foods | Safestore Holdings vs. Erste Group Bank | Safestore Holdings vs. Fevertree Drinks Plc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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