Correlation Between Acciona SA and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both Acciona SA and Evonik Industries 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 Acciona SA and Evonik Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acciona SA and Evonik Industries AG, you can compare the effects of market volatilities on Acciona SA and Evonik Industries 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 Acciona SA with a short position of Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acciona SA and Evonik Industries.
Diversification Opportunities for Acciona SA and Evonik Industries
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acciona and Evonik is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Acciona SA and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries and Acciona SA 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 Acciona SA are associated (or correlated) with Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of Acciona SA i.e., Acciona SA and Evonik Industries go up and down completely randomly.
Pair Corralation between Acciona SA and Evonik Industries
Assuming the 90 days horizon Acciona SA is expected to generate 0.98 times more return on investment than Evonik Industries. However, Acciona SA is 1.02 times less risky than Evonik Industries. It trades about -0.07 of its potential returns per unit of risk. Evonik Industries AG is currently generating about -0.13 per unit of risk. If you would invest 13,947 in Acciona SA on September 3, 2024 and sell it today you would lose (1,517) from holding Acciona SA or give up 10.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Acciona SA vs. Evonik Industries AG
Performance |
| Timeline |
| Acciona SA |
| Evonik Industries |
Acciona SA and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acciona SA and Evonik Industries
The main advantage of trading using opposite Acciona SA and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acciona SA position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| Acciona SA vs. JGC Corp | Acciona SA vs. ACS Actividades de | Acciona SA vs. Kajima Corp ADR | Acciona SA vs. ACS Actividades De |
| Evonik Industries vs. Symrise Ag PK | Evonik Industries vs. Fuchs Petrolub SE | Evonik Industries vs. Innospec | Evonik Industries vs. Air Liquide SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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