Correlation Between Yit Oyj and Travis Perkins

Can any of the company-specific risk be diversified away by investing in both Yit Oyj and Travis Perkins 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 Yit Oyj and Travis Perkins into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Yit Oyj and Travis Perkins

0.08

Correlation Coefficient

Yit Oyj  Travis Perkins

Significant diversification

The 3 months correlation between Yit and Travis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Yit Oyj ADR and Travis Perkins PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travis Perkins PLC and Yit Oyj 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 Yit Oyj ADR are associated (or correlated) with Travis Perkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travis Perkins PLC has no effect on the direction of Yit Oyj i.e., Yit Oyj and Travis Perkins go up and down completely randomly.

Pair Corralation between Yit Oyj and Travis Perkins

Assuming the 90 days horizon Yit Oyj ADR is expected to generate 1.47 times more return on investment than Travis Perkins. However, Yit Oyj is 1.47 times more volatile than Travis Perkins PLC. It trades about 0.04 of its potential returns per unit of risk. Travis Perkins PLC is currently generating about 0.05 per unit of risk. If you would invest  94.00  in Yit Oyj ADR on February 9, 2024 and sell it today you would earn a total of  8.00  from holding Yit Oyj ADR or generate 8.51% return on investment over 90 days.

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

Yit Oyj ADR  vs.  Travis Perkins PLC

Yit Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yit Oyj ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Travis Perkins PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Travis Perkins PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Travis Perkins is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yit Oyj and Travis Perkins

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

The idea behind Yit Oyj ADR and Travis Perkins 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.