Correlation Between Reliance Industries and Whitbread PLC

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

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

Diversification Opportunities for Reliance Industries and Whitbread PLC

0.7

Correlation Coefficient

Reliance Industries  Whitbread PLC

Poor diversification

The 3 months correlation between Reliance and Whitbread is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread PLC and Reliance Industries 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 Reliance Industries Limited are associated (or correlated) with Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of Reliance Industries i.e., Reliance Industries and Whitbread PLC go up and down completely randomly.

Pair Corralation between Reliance Industries and Whitbread PLC

Assuming the 90 days trading horizon Reliance Industries is expected to generate 3.27 times less return on investment than Whitbread PLC. In addition to that, Reliance Industries is 1.07 times more volatile than Whitbread PLC. It trades about 0.09 of its total potential returns per unit of risk. Whitbread PLC is currently generating about 0.3 per unit of volatility. If you would invest  247,069  in Whitbread PLC on April 24, 2025 and sell it today you would earn a total of  73,531  from holding Whitbread PLC or generate 29.76% return on investment over 90 days.

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

Reliance Industries Limited  vs.  Whitbread PLC

Reliance Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Industries Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Reliance Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Whitbread PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Whitbread PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Whitbread PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Industries and Whitbread PLC

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

The idea behind Reliance Industries Limited and Whitbread 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.