Correlation Between Bayerische Motoren and Dowlais Group
Can any of the company-specific risk be diversified away by investing in both Bayerische Motoren and Dowlais Group 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 Bayerische Motoren and Dowlais Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayerische Motoren Werke and Dowlais Group plc, you can compare the effects of market volatilities on Bayerische Motoren and Dowlais Group 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 Bayerische Motoren with a short position of Dowlais Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayerische Motoren and Dowlais Group.
Diversification Opportunities for Bayerische Motoren and Dowlais Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bayerische and Dowlais is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bayerische Motoren Werke and Dowlais Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dowlais Group plc and Bayerische Motoren 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 Bayerische Motoren Werke are associated (or correlated) with Dowlais Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dowlais Group plc has no effect on the direction of Bayerische Motoren i.e., Bayerische Motoren and Dowlais Group go up and down completely randomly.
Pair Corralation between Bayerische Motoren and Dowlais Group
Assuming the 90 days horizon Bayerische Motoren Werke is expected to generate 0.84 times more return on investment than Dowlais Group. However, Bayerische Motoren Werke is 1.19 times less risky than Dowlais Group. It trades about -0.12 of its potential returns per unit of risk. Dowlais Group plc is currently generating about -0.11 per unit of risk. If you would invest 3,497 in Bayerische Motoren Werke on September 3, 2024 and sell it today you would lose (1,036) from holding Bayerische Motoren Werke or give up 29.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayerische Motoren Werke vs. Dowlais Group plc
Performance |
| Timeline |
| Bayerische Motoren Werke |
| Dowlais Group plc |
Bayerische Motoren and Dowlais Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayerische Motoren and Dowlais Group
The main advantage of trading using opposite Bayerische Motoren and Dowlais Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayerische Motoren position performs unexpectedly, Dowlais Group 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 Dowlais Group will offset losses from the drop in Dowlais Group's long position.| Bayerische Motoren vs. Mercedes Benz Group AG | Bayerische Motoren vs. Porsche Automobile Holding | Bayerische Motoren vs. Volkswagen AG 110 | Bayerische Motoren vs. Mercedes Benz Group AG |
| Dowlais Group vs. Legacy Education | Dowlais Group vs. Apple Inc | Dowlais Group vs. NVIDIA | Dowlais Group vs. Microsoft |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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