Correlation Between Continental Aktiengesellscha and Marketing Worldwide
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and Marketing Worldwide 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 Continental Aktiengesellscha and Marketing Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and Marketing Worldwide, you can compare the effects of market volatilities on Continental Aktiengesellscha and Marketing Worldwide 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 Continental Aktiengesellscha with a short position of Marketing Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Marketing Worldwide.
Diversification Opportunities for Continental Aktiengesellscha and Marketing Worldwide
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Continental and Marketing is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Marketing Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketing Worldwide and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with Marketing Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketing Worldwide has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Marketing Worldwide go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and Marketing Worldwide
Assuming the 90 days horizon Continental Aktiengesellscha is expected to generate 8.83 times less return on investment than Marketing Worldwide. But when comparing it to its historical volatility, Continental Aktiengesellschaft is 8.28 times less risky than Marketing Worldwide. It trades about 0.13 of its potential returns per unit of risk. Marketing Worldwide is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Marketing Worldwide on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Marketing Worldwide or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. Marketing Worldwide
Performance |
| Timeline |
| Continental Aktiengesellscha |
| Marketing Worldwide |
Continental Aktiengesellscha and Marketing Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and Marketing Worldwide
The main advantage of trading using opposite Continental Aktiengesellscha and Marketing Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, Marketing Worldwide 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 Marketing Worldwide will offset losses from the drop in Marketing Worldwide's long position.The idea behind Continental Aktiengesellschaft and Marketing Worldwide 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.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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