Correlation Between FBD Holdings and Glanbia PLC

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

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

Diversification Opportunities for FBD Holdings and Glanbia PLC

0.35

Correlation Coefficient

FBD Holdings  Glanbia PLC

Weak diversification

The 3 months correlation between FBD and Glanbia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding FBD Holdings PLC and Glanbia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia PLC and FBD Holdings 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 FBD Holdings PLC are associated (or correlated) with Glanbia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia PLC has no effect on the direction of FBD Holdings i.e., FBD Holdings and Glanbia PLC go up and down completely randomly.

Pair Corralation between FBD Holdings and Glanbia PLC

Assuming the 90 days trading horizon FBD Holdings is expected to generate 1.52 times less return on investment than Glanbia PLC. In addition to that, FBD Holdings is 1.87 times more volatile than Glanbia PLC. It trades about 0.04 of its total potential returns per unit of risk. Glanbia PLC is currently generating about 0.11 per unit of volatility. If you would invest  1,753  in Glanbia PLC on March 2, 2024 and sell it today you would earn a total of  105.00  from holding Glanbia PLC or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

FBD Holdings PLC  vs.  Glanbia PLC

FBD Holdings PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FBD Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FBD Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Glanbia PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glanbia PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Glanbia PLC may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with FBD Holdings and Glanbia PLC

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

The idea behind FBD Holdings PLC and Glanbia 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.