Correlation Between Metro AG and Jernimo Martins
Can any of the company-specific risk be diversified away by investing in both Metro AG and Jernimo Martins 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 Jernimo Martins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and Jernimo Martins SGPS, you can compare the effects of market volatilities on Metro AG and Jernimo Martins 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 Jernimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and Jernimo Martins.
Diversification Opportunities for Metro AG and Jernimo Martins
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metro and Jernimo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS 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 Jernimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of Metro AG i.e., Metro AG and Jernimo Martins go up and down completely randomly.
Pair Corralation between Metro AG and Jernimo Martins
Assuming the 90 days trading horizon Metro AG is expected to generate 1.95 times more return on investment than Jernimo Martins. However, Metro AG is 1.95 times more volatile than Jernimo Martins SGPS. It trades about 0.01 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about -0.03 per unit of risk. If you would invest 537.00 in Metro AG on September 12, 2024 and sell it today you would lose (43.00) from holding Metro AG or give up 8.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. Jernimo Martins SGPS
Performance |
| Timeline |
| Metro AG |
| Jernimo Martins SGPS |
Metro AG and Jernimo Martins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and Jernimo Martins
The main advantage of trading using opposite Metro AG and Jernimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG position performs unexpectedly, Jernimo Martins 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 Jernimo Martins will offset losses from the drop in Jernimo Martins' long position.| Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS | Metro AG vs. BANK HANDLOWY |
| Jernimo Martins vs. Metro AG | Jernimo Martins vs. Superior Plus Corp | Jernimo Martins vs. SIVERS SEMICONDUCTORS AB | Jernimo Martins vs. NorAm Drilling AS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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