Correlation Between Otis Worldwide and Deutz AG
Can any of the company-specific risk be diversified away by investing in both Otis Worldwide and Deutz AG 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 Otis Worldwide and Deutz AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otis Worldwide Corp and Deutz AG, you can compare the effects of market volatilities on Otis Worldwide and Deutz AG 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 Otis Worldwide with a short position of Deutz AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otis Worldwide and Deutz AG.
Diversification Opportunities for Otis Worldwide and Deutz AG
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Otis and Deutz is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Otis Worldwide Corp and Deutz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutz AG and Otis Worldwide 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 Otis Worldwide Corp are associated (or correlated) with Deutz AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutz AG has no effect on the direction of Otis Worldwide i.e., Otis Worldwide and Deutz AG go up and down completely randomly.
Pair Corralation between Otis Worldwide and Deutz AG
Assuming the 90 days horizon Otis Worldwide Corp is expected to generate 0.51 times more return on investment than Deutz AG. However, Otis Worldwide Corp is 1.97 times less risky than Deutz AG. It trades about 0.05 of its potential returns per unit of risk. Deutz AG is currently generating about 0.01 per unit of risk. If you would invest 7,382 in Otis Worldwide Corp on September 4, 2024 and sell it today you would earn a total of 2,262 from holding Otis Worldwide Corp or generate 30.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otis Worldwide Corp vs. Deutz AG
Performance |
| Timeline |
| Otis Worldwide Corp |
| Deutz AG |
Otis Worldwide and Deutz AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otis Worldwide and Deutz AG
The main advantage of trading using opposite Otis Worldwide and Deutz AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otis Worldwide position performs unexpectedly, Deutz AG 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 Deutz AG will offset losses from the drop in Deutz AG's long position.| Otis Worldwide vs. SIEMENS AG SP | Otis Worldwide vs. Siemens Aktiengesellschaft | Otis Worldwide vs. Siemens Aktiengesellschaft | Otis Worldwide vs. Atlas Copco A |
| Deutz AG vs. SBA Communications Corp | Deutz AG vs. Shenandoah Telecommunications | Deutz AG vs. Singapore Telecommunications Limited | Deutz AG vs. Zoom Video Communications |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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