Correlation Between WICKES GROUP and HORNBACH Baumarkt
Can any of the company-specific risk be diversified away by investing in both WICKES GROUP and HORNBACH Baumarkt 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 WICKES GROUP and HORNBACH Baumarkt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WICKES GROUP PLC and HORNBACH Baumarkt AG, you can compare the effects of market volatilities on WICKES GROUP and HORNBACH Baumarkt 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 WICKES GROUP with a short position of HORNBACH Baumarkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of WICKES GROUP and HORNBACH Baumarkt.
Diversification Opportunities for WICKES GROUP and HORNBACH Baumarkt
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WICKES and HORNBACH is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding WICKES GROUP PLC and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt and WICKES 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 WICKES GROUP PLC are associated (or correlated) with HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of WICKES GROUP i.e., WICKES GROUP and HORNBACH Baumarkt go up and down completely randomly.
Pair Corralation between WICKES GROUP and HORNBACH Baumarkt
Assuming the 90 days horizon WICKES GROUP PLC is expected to under-perform the HORNBACH Baumarkt. But the stock apears to be less risky and, when comparing its historical volatility, WICKES GROUP PLC is 1.69 times less risky than HORNBACH Baumarkt. The stock trades about -0.29 of its potential returns per unit of risk. The HORNBACH Baumarkt AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,000 in HORNBACH Baumarkt AG on September 1, 2024 and sell it today you would lose (50.00) from holding HORNBACH Baumarkt AG or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
WICKES GROUP PLC vs. HORNBACH Baumarkt AG
Performance |
| Timeline |
| WICKES GROUP PLC |
| HORNBACH Baumarkt |
WICKES GROUP and HORNBACH Baumarkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WICKES GROUP and HORNBACH Baumarkt
The main advantage of trading using opposite WICKES GROUP and HORNBACH Baumarkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WICKES GROUP position performs unexpectedly, HORNBACH Baumarkt 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 HORNBACH Baumarkt will offset losses from the drop in HORNBACH Baumarkt's long position.| WICKES GROUP vs. CapitaLand Investment Limited | WICKES GROUP vs. PennyMac Mortgage Investment | WICKES GROUP vs. Jacquet Metal Service | WICKES GROUP vs. LION ONE METALS |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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