Correlation Between Commerzbank and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Seed Innovations 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 Seed Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Seed Innovations, you can compare the effects of market volatilities on Commerzbank and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Seed Innovations.
Diversification Opportunities for Commerzbank and Seed Innovations
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commerzbank and Seed is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Commerzbank i.e., Commerzbank and Seed Innovations go up and down completely randomly.
Pair Corralation between Commerzbank and Seed Innovations
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 0.8 times more return on investment than Seed Innovations. However, Commerzbank AG is 1.25 times less risky than Seed Innovations. It trades about 0.82 of its potential returns per unit of risk. Seed Innovations is currently generating about 0.22 per unit of risk. If you would invest 1,510 in Commerzbank AG on October 25, 2024 and sell it today you would earn a total of 296.00 from holding Commerzbank AG or generate 19.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerzbank AG vs. Seed Innovations
Performance |
| Timeline |
| Commerzbank AG |
| Seed Innovations |
Commerzbank and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Seed Innovations
The main advantage of trading using opposite Commerzbank and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| Commerzbank vs. PPHE Hotel Group | Commerzbank vs. Invesco Physical Silver | Commerzbank vs. Edita Food Industries | Commerzbank vs. Hecla Mining Co |
| Seed Innovations vs. Ameriprise Financial | Seed Innovations vs. Commerzbank AG | Seed Innovations vs. Raymond James Financial | Seed Innovations vs. JD Sports Fashion |
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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