Correlation Between Bayerische Motoren and Suzuki
Can any of the company-specific risk be diversified away by investing in both Bayerische Motoren and Suzuki 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 Suzuki 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 Suzuki Motor, you can compare the effects of market volatilities on Bayerische Motoren and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayerische Motoren and Suzuki.
Diversification Opportunities for Bayerische Motoren and Suzuki
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayerische and Suzuki is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bayerische Motoren Werke and Suzuki Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor has no effect on the direction of Bayerische Motoren i.e., Bayerische Motoren and Suzuki go up and down completely randomly.
Pair Corralation between Bayerische Motoren and Suzuki
Assuming the 90 days horizon Bayerische Motoren is expected to generate 603.69 times less return on investment than Suzuki. But when comparing it to its historical volatility, Bayerische Motoren Werke is 27.62 times less risky than Suzuki. It trades about 0.01 of its potential returns per unit of risk. Suzuki Motor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 809.00 in Suzuki Motor on August 28, 2024 and sell it today you would earn a total of 247.00 from holding Suzuki Motor or generate 30.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.28% |
| Values | Daily Returns |
Bayerische Motoren Werke vs. Suzuki Motor
Performance |
| Timeline |
| Bayerische Motoren Werke |
| Suzuki Motor |
Bayerische Motoren and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayerische Motoren and Suzuki
The main advantage of trading using opposite Bayerische Motoren and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayerische Motoren position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| Bayerische Motoren vs. Isuzu Motors | Bayerische Motoren vs. Renault SA | Bayerische Motoren vs. Toyota Motor Corp | Bayerische Motoren vs. Porsche Automobile Holding |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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