Correlation Between Bridgestone Corp and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Bridgestone Corp and Continental 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 Bridgestone Corp and Continental Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone Corp ADR and Continental Aktiengesellschaft, you can compare the effects of market volatilities on Bridgestone Corp and Continental 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 Bridgestone Corp with a short position of Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone Corp and Continental Aktiengesellscha.
Diversification Opportunities for Bridgestone Corp and Continental Aktiengesellscha
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bridgestone and Continental is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone Corp ADR and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and Bridgestone Corp 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 Bridgestone Corp ADR are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Bridgestone Corp i.e., Bridgestone Corp and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between Bridgestone Corp and Continental Aktiengesellscha
Assuming the 90 days horizon Bridgestone Corp is expected to generate 1.1 times less return on investment than Continental Aktiengesellscha. But when comparing it to its historical volatility, Bridgestone Corp ADR is 1.57 times less risky than Continental Aktiengesellscha. It trades about 0.2 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,755 in Continental Aktiengesellschaft on November 3, 2024 and sell it today you would earn a total of 466.00 from holding Continental Aktiengesellschaft or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgestone Corp ADR vs. Continental Aktiengesellschaft
Performance |
| Timeline |
| Bridgestone Corp ADR |
| Continental Aktiengesellscha |
Bridgestone Corp and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone Corp and Continental Aktiengesellscha
The main advantage of trading using opposite Bridgestone Corp and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone Corp position performs unexpectedly, Continental 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.| Bridgestone Corp vs. Continental AG PK | Bridgestone Corp vs. Compagnie Generale des | Bridgestone Corp vs. Denso Corp ADR | Bridgestone Corp vs. Subaru Corp ADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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