Correlation Between Carnival and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both Carnival and HeidelbergCement 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 Carnival and HeidelbergCement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and HeidelbergCement AG ADR, you can compare the effects of market volatilities on Carnival and HeidelbergCement 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 Carnival with a short position of HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and HeidelbergCement.
Diversification Opportunities for Carnival and HeidelbergCement
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carnival and HeidelbergCement is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and HeidelbergCement AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement AG ADR and Carnival 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 Carnival are associated (or correlated) with HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement AG ADR has no effect on the direction of Carnival i.e., Carnival and HeidelbergCement go up and down completely randomly.
Pair Corralation between Carnival and HeidelbergCement
Considering the 90-day investment horizon Carnival is expected to generate 1.21 times less return on investment than HeidelbergCement. In addition to that, Carnival is 1.22 times more volatile than HeidelbergCement AG ADR. It trades about 0.28 of its total potential returns per unit of risk. HeidelbergCement AG ADR is currently generating about 0.42 per unit of volatility. If you would invest 2,441 in HeidelbergCement AG ADR on November 4, 2024 and sell it today you would earn a total of 390.00 from holding HeidelbergCement AG ADR or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Carnival vs. HeidelbergCement AG ADR
Performance |
| Timeline |
| Carnival |
| HeidelbergCement AG ADR |
Carnival and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and HeidelbergCement
The main advantage of trading using opposite Carnival and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
| HeidelbergCement vs. Anhui Conch Cement | HeidelbergCement vs. Holcim | HeidelbergCement vs. Buzzi Unicem SpA | HeidelbergCement vs. Wienerberger Baustoffindustrie |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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