Correlation Between Birkenstock Holding and Newretail
Can any of the company-specific risk be diversified away by investing in both Birkenstock Holding and Newretail 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 Birkenstock Holding and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birkenstock Holding plc and Newretail Co, you can compare the effects of market volatilities on Birkenstock Holding and Newretail 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 Birkenstock Holding with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birkenstock Holding and Newretail.
Diversification Opportunities for Birkenstock Holding and Newretail
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Birkenstock and Newretail is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Birkenstock Holding 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 Birkenstock Holding plc are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and Newretail go up and down completely randomly.
Pair Corralation between Birkenstock Holding and Newretail
Given the investment horizon of 90 days Birkenstock Holding plc is expected to under-perform the Newretail. But the stock apears to be less risky and, when comparing its historical volatility, Birkenstock Holding plc is 1.92 times less risky than Newretail. The stock trades about -0.01 of its potential returns per unit of risk. The Newretail Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Newretail Co on December 11, 2024 and sell it today you would earn a total of 1,050 from holding Newretail Co or generate 97.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.5% |
| Values | Daily Returns |
Birkenstock Holding plc vs. Newretail Co
Performance |
| Timeline |
| Birkenstock Holding plc |
| Newretail |
Birkenstock Holding and Newretail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birkenstock Holding and Newretail
The main advantage of trading using opposite Birkenstock Holding and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birkenstock Holding position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.| Birkenstock Holding vs. Take Two Interactive Software | ||
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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