Correlation Between TRAVIS PERKINS and ZENERGY B

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

By analyzing existing cross correlation between TRAVIS PERKINS LS 1 and ZENERGY B AB, you can compare the effects of market volatilities on TRAVIS PERKINS and ZENERGY B 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 TRAVIS PERKINS with a short position of ZENERGY B. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVIS PERKINS and ZENERGY B.

Diversification Opportunities for TRAVIS PERKINS and ZENERGY B

0.61

Correlation Coefficient

TRAVIS PERKINS  ZENERGY B

Poor diversification

The 3 months correlation between TRAVIS and ZENERGY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TRAVIS PERKINS LS 1 and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and TRAVIS PERKINS 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 TRAVIS PERKINS LS 1 are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of TRAVIS PERKINS i.e., TRAVIS PERKINS and ZENERGY B go up and down completely randomly.

Pair Corralation between TRAVIS PERKINS and ZENERGY B

Assuming the 90 days trading horizon TRAVIS PERKINS LS 1 is expected to generate 0.46 times more return on investment than ZENERGY B. However, TRAVIS PERKINS LS 1 is 2.16 times less risky than ZENERGY B. It trades about -0.22 of its potential returns per unit of risk. ZENERGY B AB is currently generating about -0.18 per unit of risk. If you would invest  1,094  in TRAVIS PERKINS LS 1 on September 22, 2024 and sell it today you would lose (259.00) from holding TRAVIS PERKINS LS 1 or give up 23.67% of portfolio value over 90 days.

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

TRAVIS PERKINS LS 1  vs.  ZENERGY B AB

TRAVIS PERKINS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRAVIS PERKINS LS 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRAVIS PERKINS and ZENERGY B

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

The idea behind TRAVIS PERKINS LS 1 and ZENERGY B AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.