Correlation Between Commerzbank and Mobius Investment
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Mobius Investment 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 Commerzbank and Mobius Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Mobius Investment Trust, you can compare the effects of market volatilities on Commerzbank and Mobius Investment 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 Commerzbank with a short position of Mobius Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Mobius Investment.
Diversification Opportunities for Commerzbank and Mobius Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commerzbank and Mobius is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Mobius Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobius Investment Trust and Commerzbank 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 Commerzbank AG are associated (or correlated) with Mobius Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobius Investment Trust has no effect on the direction of Commerzbank i.e., Commerzbank and Mobius Investment go up and down completely randomly.
Pair Corralation between Commerzbank and Mobius Investment
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 1.98 times more return on investment than Mobius Investment. However, Commerzbank is 1.98 times more volatile than Mobius Investment Trust. It trades about 0.13 of its potential returns per unit of risk. Mobius Investment Trust is currently generating about 0.09 per unit of risk. If you would invest 1,330 in Commerzbank AG on November 4, 2024 and sell it today you would earn a total of 533.00 from holding Commerzbank AG or generate 40.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerzbank AG vs. Mobius Investment Trust
Performance |
| Timeline |
| Commerzbank AG |
| Mobius Investment Trust |
Commerzbank and Mobius Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Mobius Investment
The main advantage of trading using opposite Commerzbank and Mobius Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Mobius Investment 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 Mobius Investment will offset losses from the drop in Mobius Investment's long position.| Commerzbank vs. Samsung Electronics Co | Commerzbank vs. Samsung Electronics Co | Commerzbank vs. Toyota Motor Corp | Commerzbank vs. Reliance Industries Ltd |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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