Correlation Between Charter Communications and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Rheinmetall 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 Charter Communications and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Rheinmetall AG, you can compare the effects of market volatilities on Charter Communications and Rheinmetall 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 Charter Communications with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Rheinmetall.
Diversification Opportunities for Charter Communications and Rheinmetall
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Rheinmetall is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and Charter Communications 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 Charter Communications are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Charter Communications i.e., Charter Communications and Rheinmetall go up and down completely randomly.
Pair Corralation between Charter Communications and Rheinmetall
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.5 times less return on investment than Rheinmetall. In addition to that, Charter Communications is 2.07 times more volatile than Rheinmetall AG. It trades about 0.19 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.58 per unit of volatility. If you would invest 47,440 in Rheinmetall AG on September 1, 2024 and sell it today you would earn a total of 14,880 from holding Rheinmetall AG or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Charter Communications vs. Rheinmetall AG
Performance |
| Timeline |
| Charter Communications |
| Rheinmetall AG |
Charter Communications and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Rheinmetall
The main advantage of trading using opposite Charter Communications and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Charter Communications vs. HK Electric Investments | Charter Communications vs. EAT WELL INVESTMENT | Charter Communications vs. ETFS Coffee ETC | Charter Communications vs. VITEC SOFTWARE GROUP |
| Rheinmetall vs. Entravision Communications | Rheinmetall vs. Ares Management Corp | Rheinmetall vs. Charter Communications | Rheinmetall vs. Highlight Communications AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |