Correlation Between Metro AG and MOVIE GAMES
Can any of the company-specific risk be diversified away by investing in both Metro AG and MOVIE GAMES 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 Metro AG and MOVIE GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and MOVIE GAMES SA, you can compare the effects of market volatilities on Metro AG and MOVIE GAMES 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 Metro AG with a short position of MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and MOVIE GAMES.
Diversification Opportunities for Metro AG and MOVIE GAMES
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metro and MOVIE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG and MOVIE GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOVIE GAMES SA and Metro AG 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 Metro AG are associated (or correlated) with MOVIE GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOVIE GAMES SA has no effect on the direction of Metro AG i.e., Metro AG and MOVIE GAMES go up and down completely randomly.
Pair Corralation between Metro AG and MOVIE GAMES
Assuming the 90 days horizon Metro AG is expected to under-perform the MOVIE GAMES. But the stock apears to be less risky and, when comparing its historical volatility, Metro AG is 1.95 times less risky than MOVIE GAMES. The stock trades about -0.07 of its potential returns per unit of risk. The MOVIE GAMES SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 418.00 in MOVIE GAMES SA on September 24, 2024 and sell it today you would lose (121.00) from holding MOVIE GAMES SA or give up 28.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. MOVIE GAMES SA
Performance |
| Timeline |
| Metro AG |
| MOVIE GAMES SA |
Metro AG and MOVIE GAMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and MOVIE GAMES
The main advantage of trading using opposite Metro AG and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG position performs unexpectedly, MOVIE GAMES 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 MOVIE GAMES will offset losses from the drop in MOVIE GAMES's long position.| Metro AG vs. Singapore Airlines Limited | Metro AG vs. Texas Roadhouse | Metro AG vs. SINGAPORE AIRLINES | Metro AG vs. EVS Broadcast Equipment |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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