Correlation Between Team Internet and Ferguson Plc

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

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

Diversification Opportunities for Team Internet and Ferguson Plc

-0.77

Correlation Coefficient

Team Internet  Ferguson Plc

Pay attention - limited upside

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

Pair Corralation between Team Internet and Ferguson Plc

Assuming the 90 days trading horizon Team Internet Group is expected to under-perform the Ferguson Plc. In addition to that, Team Internet is 2.41 times more volatile than Ferguson Plc. It trades about -0.1 of its total potential returns per unit of risk. Ferguson Plc is currently generating about -0.02 per unit of volatility. If you would invest  1,536,895  in Ferguson Plc on September 17, 2024 and sell it today you would lose (50,895) from holding Ferguson Plc or give up 3.31% of portfolio value over 90 days.

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

Team Internet Group  vs.  Ferguson Plc

Team Internet Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Team Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ferguson Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferguson Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ferguson Plc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Team Internet and Ferguson Plc

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

The idea behind Team Internet Group and Ferguson Plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.