Correlation Between CAIRN HOMES and DEUTSCHE WOHNEN
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and DEUTSCHE WOHNEN 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 CAIRN HOMES and DEUTSCHE WOHNEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on CAIRN HOMES and DEUTSCHE WOHNEN 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 CAIRN HOMES with a short position of DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and DEUTSCHE WOHNEN.
Diversification Opportunities for CAIRN HOMES and DEUTSCHE WOHNEN
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAIRN and DEUTSCHE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and DEUTSCHE WOHNEN go up and down completely randomly.
Pair Corralation between CAIRN HOMES and DEUTSCHE WOHNEN
Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 0.89 times more return on investment than DEUTSCHE WOHNEN. However, CAIRN HOMES EO is 1.13 times less risky than DEUTSCHE WOHNEN. It trades about 0.1 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about 0.01 per unit of risk. If you would invest 85.00 in CAIRN HOMES EO on October 16, 2024 and sell it today you would earn a total of 140.00 from holding CAIRN HOMES EO or generate 164.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIRN HOMES EO vs. DEUTSCHE WOHNEN ADRS12
Performance |
| Timeline |
| CAIRN HOMES EO |
| DEUTSCHE WOHNEN ADRS12 |
CAIRN HOMES and DEUTSCHE WOHNEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and DEUTSCHE WOHNEN
The main advantage of trading using opposite CAIRN HOMES and DEUTSCHE WOHNEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES position performs unexpectedly, DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN will offset losses from the drop in DEUTSCHE WOHNEN's long position.| CAIRN HOMES vs. H2O Retailing | CAIRN HOMES vs. SALESFORCE INC CDR | CAIRN HOMES vs. Salesforce | CAIRN HOMES vs. The Trade Desk |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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