Correlation Between Kerry Group and Tate Lyle
Can any of the company-specific risk be diversified away by investing in both Kerry Group 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 Kerry Group and Tate Lyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group PLC and Tate Lyle PLC, you can compare the effects of market volatilities on Kerry Group 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 Kerry Group with a short position of Tate Lyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Tate Lyle.
Diversification Opportunities for Kerry Group and Tate Lyle
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kerry and Tate is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC 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 Kerry Group 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 Kerry Group PLC 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 Kerry Group i.e., Kerry Group and Tate Lyle go up and down completely randomly.
Pair Corralation between Kerry Group and Tate Lyle
Assuming the 90 days horizon Kerry Group PLC is expected to under-perform the Tate Lyle. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kerry Group PLC is 2.79 times less risky than Tate Lyle. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Tate Lyle PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,191 in Tate Lyle PLC on January 18, 2024 and sell it today you would lose (98.00) from holding Tate Lyle PLC or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.92% |
| Values | Daily Returns |
Kerry Group PLC vs. Tate Lyle PLC
Performance |
| Timeline |
| Kerry Group PLC |
| Tate Lyle PLC |
Kerry Group and Tate Lyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Tate Lyle
The main advantage of trading using opposite Kerry Group and Tate Lyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group 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.The idea behind Kerry Group PLC and Tate Lyle 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.| Tate Lyle vs. PT Bank Rakyat | Tate Lyle vs. Bank Rakyat | Tate Lyle vs. Bank Mandiri Persero | Tate Lyle vs. Bank Mandiri Persero |
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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