Correlation Between Overstock and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both Overstock and Gerresheimer 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 Overstock and Gerresheimer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overstock and Gerresheimer AG, you can compare the effects of market volatilities on Overstock and Gerresheimer 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 Overstock with a short position of Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overstock and Gerresheimer.
Diversification Opportunities for Overstock and Gerresheimer
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Overstock and Gerresheimer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Overstock and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG and Overstock 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 Overstock are associated (or correlated) with Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of Overstock i.e., Overstock and Gerresheimer go up and down completely randomly.
Pair Corralation between Overstock and Gerresheimer
Assuming the 90 days trading horizon Overstock is expected to under-perform the Gerresheimer. In addition to that, Overstock is 5.08 times more volatile than Gerresheimer AG. It trades about -0.24 of its total potential returns per unit of risk. Gerresheimer AG is currently generating about -0.52 per unit of volatility. If you would invest 8,380 in Gerresheimer AG on August 24, 2024 and sell it today you would lose (1,337) from holding Gerresheimer AG or give up 15.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overstock vs. Gerresheimer AG
Performance |
| Timeline |
| Overstock |
| Gerresheimer AG |
Overstock and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overstock and Gerresheimer
The main advantage of trading using opposite Overstock and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overstock position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| Overstock vs. Litigation Capital Management | Overstock vs. Coor Service Management | Overstock vs. Beeks Trading | Overstock vs. New Residential Investment |
| Gerresheimer vs. Bisichi Mining PLC | Gerresheimer vs. Summit Materials Cl | Gerresheimer vs. AfriTin Mining | Gerresheimer vs. Coeur Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |