Correlation Between Bayerische Motoren and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Bayerische Motoren and Aston Martin 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 Aston Martin 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 Aston Martin Lagonda, you can compare the effects of market volatilities on Bayerische Motoren and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayerische Motoren and Aston Martin.
Diversification Opportunities for Bayerische Motoren and Aston Martin
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bayerische and Aston is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bayerische Motoren Werke and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Bayerische Motoren i.e., Bayerische Motoren and Aston Martin go up and down completely randomly.
Pair Corralation between Bayerische Motoren and Aston Martin
Assuming the 90 days horizon Bayerische Motoren Werke is expected to generate 0.82 times more return on investment than Aston Martin. However, Bayerische Motoren Werke is 1.22 times less risky than Aston Martin. It trades about 0.01 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.01 per unit of risk. If you would invest 7,104 in Bayerische Motoren Werke on November 2, 2024 and sell it today you would lose (324.00) from holding Bayerische Motoren Werke or give up 4.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.05% |
| Values | Daily Returns |
Bayerische Motoren Werke vs. Aston Martin Lagonda
Performance |
| Timeline |
| Bayerische Motoren Werke |
| Aston Martin Lagonda |
Bayerische Motoren and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayerische Motoren and Aston Martin
The main advantage of trading using opposite Bayerische Motoren and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayerische Motoren position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Bayerische Motoren vs. Honda Motor Co | Bayerische Motoren vs. Volkswagen AG VZO | Bayerische Motoren vs. Volkswagen AG | Bayerische Motoren vs. Bayerische Motoren Werke |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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