Correlation Between Rheinmetall and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Virgin Wines 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 Rheinmetall and Virgin Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Virgin Wines UK, you can compare the effects of market volatilities on Rheinmetall and Virgin Wines 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 Rheinmetall with a short position of Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Virgin Wines.
Diversification Opportunities for Rheinmetall and Virgin Wines
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rheinmetall and Virgin is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Rheinmetall i.e., Rheinmetall and Virgin Wines go up and down completely randomly.
Pair Corralation between Rheinmetall and Virgin Wines
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 1.23 times more return on investment than Virgin Wines. However, Rheinmetall is 1.23 times more volatile than Virgin Wines UK. It trades about 0.4 of its potential returns per unit of risk. Virgin Wines UK is currently generating about 0.01 per unit of risk. If you would invest 62,030 in Rheinmetall AG on October 25, 2024 and sell it today you would earn a total of 9,990 from holding Rheinmetall AG or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Virgin Wines UK
Performance |
| Timeline |
| Rheinmetall AG |
| Virgin Wines UK |
Rheinmetall and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Virgin Wines
The main advantage of trading using opposite Rheinmetall and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| Rheinmetall vs. United Airlines Holdings | Rheinmetall vs. International Consolidated Airlines | Rheinmetall vs. Pets at Home | Rheinmetall vs. Eastman Chemical Co |
| Virgin Wines vs. National Beverage Corp | Virgin Wines vs. Rheinmetall AG | Virgin Wines vs. First Class Metals | Virgin Wines vs. Empire Metals Limited |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |