Correlation Between Commerzbank and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Magyar Telekom 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 Commerzbank and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Magyar Telekom PLC, you can compare the effects of market volatilities on Commerzbank and Magyar Telekom 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 Commerzbank with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Magyar Telekom.
Diversification Opportunities for Commerzbank and Magyar Telekom
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commerzbank and Magyar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Magyar Telekom PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom PLC and Commerzbank 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 Commerzbank AG are associated (or correlated) with Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom PLC has no effect on the direction of Commerzbank i.e., Commerzbank and Magyar Telekom go up and down completely randomly.
Pair Corralation between Commerzbank and Magyar Telekom
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 2.36 times more return on investment than Magyar Telekom. However, Commerzbank is 2.36 times more volatile than Magyar Telekom PLC. It trades about 0.13 of its potential returns per unit of risk. Magyar Telekom PLC is currently generating about 0.21 per unit of risk. If you would invest 413,182 in Commerzbank AG on August 25, 2024 and sell it today you would earn a total of 210,218 from holding Commerzbank AG or generate 50.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 51.54% |
| Values | Daily Returns |
Commerzbank AG vs. Magyar Telekom PLC
Performance |
| Timeline |
| Commerzbank AG |
| Magyar Telekom PLC |
Commerzbank and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Magyar Telekom
The main advantage of trading using opposite Commerzbank and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom's long position.| Commerzbank vs. OTP Bank Nyrt | Commerzbank vs. MOL Nyrt | Commerzbank vs. OPUS GLOBAL Nyrt | Commerzbank vs. ALTEO Energiaszolgaltato Nyrt |
| Magyar Telekom vs. Commerzbank AG | Magyar Telekom vs. OTP Bank Nyrt | Magyar Telekom vs. NordTelekom Telecommunications Service | Magyar Telekom vs. Nutex Investments PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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