Correlation Between Cummins and Aumann AG
Can any of the company-specific risk be diversified away by investing in both Cummins and Aumann AG 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 Cummins and Aumann AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cummins and Aumann AG, you can compare the effects of market volatilities on Cummins and Aumann AG 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 Cummins with a short position of Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cummins and Aumann AG.
Diversification Opportunities for Cummins and Aumann AG
Excellent diversification
The 3 months correlation between Cummins and Aumann is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cummins and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG and Cummins 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 Cummins are associated (or correlated) with Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Cummins i.e., Cummins and Aumann AG go up and down completely randomly.
Pair Corralation between Cummins and Aumann AG
If you would invest 33,670 in Cummins on September 13, 2024 and sell it today you would earn a total of 3,387 from holding Cummins or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Cummins vs. Aumann AG
Performance |
| Timeline |
| Cummins |
| Aumann AG |
Cummins and Aumann AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cummins and Aumann AG
The main advantage of trading using opposite Cummins and Aumann AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cummins position performs unexpectedly, Aumann AG 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 Aumann AG will offset losses from the drop in Aumann AG's long position.The idea behind Cummins and Aumann AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aumann AG vs. Xinjiang Goldwind Science | Aumann AG vs. American Superconductor | Aumann AG vs. Cummins | Aumann AG vs. Aquagold International |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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