Correlation Between Associated British and Tate Lyle
Can any of the company-specific risk be diversified away by investing in both Associated British and Tate Lyle 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 Associated British and Tate Lyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Tate Lyle PLC, you can compare the effects of market volatilities on Associated British and Tate Lyle 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 Associated British with a short position of Tate Lyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Tate Lyle.
Diversification Opportunities for Associated British and Tate Lyle
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Associated and Tate is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Tate Lyle PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tate Lyle PLC and Associated British 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 Associated British Foods are associated (or correlated) with Tate Lyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tate Lyle PLC has no effect on the direction of Associated British i.e., Associated British and Tate Lyle go up and down completely randomly.
Pair Corralation between Associated British and Tate Lyle
Assuming the 90 days horizon Associated British Foods is expected to generate 1.68 times more return on investment than Tate Lyle. However, Associated British is 1.68 times more volatile than Tate Lyle PLC. It trades about 0.14 of its potential returns per unit of risk. Tate Lyle PLC is currently generating about 0.18 per unit of risk. If you would invest 3,114 in Associated British Foods on January 26, 2024 and sell it today you would earn a total of 241.00 from holding Associated British Foods or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Tate Lyle PLC
Performance |
| Timeline |
| Associated British Foods |
| Tate Lyle PLC |
Associated British and Tate Lyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Tate Lyle
The main advantage of trading using opposite Associated British and Tate Lyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Tate Lyle 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 Tate Lyle will offset losses from the drop in Tate Lyle's long position.| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Artisan Consumer Goods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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