Correlation Between XLMedia PLC and GB Group
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and GB Group 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 XLMedia PLC and GB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and GB Group plc, you can compare the effects of market volatilities on XLMedia PLC and GB Group 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 XLMedia PLC with a short position of GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and GB Group.
Diversification Opportunities for XLMedia PLC and GB Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XLMedia and GBG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc and XLMedia 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 XLMedia PLC are associated (or correlated) with GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and GB Group go up and down completely randomly.
Pair Corralation between XLMedia PLC and GB Group
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 10.62 times less return on investment than GB Group. In addition to that, XLMedia PLC is 1.73 times more volatile than GB Group plc. It trades about 0.0 of its total potential returns per unit of risk. GB Group plc is currently generating about 0.07 per unit of volatility. If you would invest 31,260 in GB Group plc on September 23, 2024 and sell it today you would earn a total of 3,260 from holding GB Group plc or generate 10.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
XLMedia PLC vs. GB Group plc
Performance |
Timeline |
XLMedia PLC |
GB Group plc |
XLMedia PLC and GB Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with XLMedia PLC and GB Group
The main advantage of trading using opposite XLMedia PLC and GB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, GB Group 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 GB Group will offset losses from the drop in GB Group's long position.XLMedia PLC vs. Everyman Media Group | XLMedia PLC vs. Spirent Communications plc | XLMedia PLC vs. G5 Entertainment AB | XLMedia PLC vs. Universal Display Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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