Correlation Between Birkenstock Holding and New Economy
Can any of the company-specific risk be diversified away by investing in both Birkenstock Holding and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Birkenstock Holding and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birkenstock Holding and New Economy.
Diversification Opportunities for Birkenstock Holding and New Economy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Birkenstock and New is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and New Economy go up and down completely randomly.
Pair Corralation between Birkenstock Holding and New Economy
Given the investment horizon of 90 days Birkenstock Holding plc is expected to under-perform the New Economy. In addition to that, Birkenstock Holding is 1.68 times more volatile than New Economy Fund. It trades about -0.35 of its total potential returns per unit of risk. New Economy Fund is currently generating about -0.37 per unit of volatility. If you would invest 6,534 in New Economy Fund on December 13, 2024 and sell it today you would lose (653.00) from holding New Economy Fund or give up 9.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birkenstock Holding plc vs. New Economy Fund
Performance |
| Timeline |
| Birkenstock Holding plc |
| New Economy Fund |
Birkenstock Holding and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birkenstock Holding and New Economy
The main advantage of trading using opposite Birkenstock Holding and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birkenstock Holding position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Birkenstock Holding vs. Hertz Global Hldgs | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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