Correlation Between Budapest and Waberers
Can any of the company-specific risk be diversified away by investing in both Budapest and Waberers 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 Budapest and Waberers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Budapest SE and Waberers, you can compare the effects of market volatilities on Budapest and Waberers 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 Budapest with a short position of Waberers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Budapest and Waberers.
Diversification Opportunities for Budapest and Waberers
Pay attention - limited upside
The 3 months correlation between Budapest and Waberers is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Budapest SE and Waberers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waberers and Budapest 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 Budapest SE are associated (or correlated) with Waberers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waberers has no effect on the direction of Budapest i.e., Budapest and Waberers go up and down completely randomly.
Pair Corralation between Budapest and Waberers
Assuming the 90 days trading horizon Budapest is expected to generate 1.18 times less return on investment than Waberers. But when comparing it to its historical volatility, Budapest SE is 1.86 times less risky than Waberers. It trades about 0.15 of its potential returns per unit of risk. Waberers is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 189,446 in Waberers on September 14, 2024 and sell it today you would earn a total of 180,554 from holding Waberers or generate 95.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Budapest SE vs. Waberers
Performance |
| Timeline |
Budapest and Waberers Volatility Contrast
Predicted Return Density |
| Returns |
Budapest SE
Pair trading matchups for Budapest
Waberers
Pair trading matchups for Waberers
Pair Trading with Budapest and Waberers
The main advantage of trading using opposite Budapest and Waberers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Budapest position performs unexpectedly, Waberers 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 Waberers will offset losses from the drop in Waberers' long position.| Budapest vs. NordTelekom Telecommunications Service | Budapest vs. Infineon Technologies AG | Budapest vs. Delta Technologies Nyrt |
| Waberers vs. OTP Bank Nyrt | Waberers vs. NordTelekom Telecommunications Service | Waberers vs. Deutsche Bank AG | Waberers vs. Infineon Technologies AG |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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