Correlation Between BAWAG Group and Wolford Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both BAWAG Group and Wolford Aktiengesellscha 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 BAWAG Group and Wolford Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAWAG Group AG and Wolford Aktiengesellschaft, you can compare the effects of market volatilities on BAWAG Group and Wolford Aktiengesellscha 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 BAWAG Group with a short position of Wolford Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAWAG Group and Wolford Aktiengesellscha.
Diversification Opportunities for BAWAG Group and Wolford Aktiengesellscha
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BAWAG and Wolford is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BAWAG Group AG and Wolford Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolford Aktiengesellscha and BAWAG Group 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 BAWAG Group AG are associated (or correlated) with Wolford Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolford Aktiengesellscha has no effect on the direction of BAWAG Group i.e., BAWAG Group and Wolford Aktiengesellscha go up and down completely randomly.
Pair Corralation between BAWAG Group and Wolford Aktiengesellscha
Assuming the 90 days horizon BAWAG Group is expected to generate 9.82 times less return on investment than Wolford Aktiengesellscha. But when comparing it to its historical volatility, BAWAG Group AG is 8.18 times less risky than Wolford Aktiengesellscha. It trades about 0.28 of its potential returns per unit of risk. Wolford Aktiengesellschaft is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Wolford Aktiengesellschaft on September 18, 2024 and sell it today you would earn a total of 194.00 from holding Wolford Aktiengesellschaft or generate 77.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BAWAG Group AG vs. Wolford Aktiengesellschaft
Performance |
| Timeline |
| BAWAG Group AG |
| Wolford Aktiengesellscha |
BAWAG Group and Wolford Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAWAG Group and Wolford Aktiengesellscha
The main advantage of trading using opposite BAWAG Group and Wolford Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAWAG Group position performs unexpectedly, Wolford Aktiengesellscha 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 Wolford Aktiengesellscha will offset losses from the drop in Wolford Aktiengesellscha's long position.The idea behind BAWAG Group AG and Wolford Aktiengesellschaft pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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