Correlation Between Continental and Environmental Solutions
Can any of the company-specific risk be diversified away by investing in both Continental and Environmental Solutions 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 and Environmental Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental AG PK and Environmental Solutions Worldwide, you can compare the effects of market volatilities on Continental and Environmental Solutions 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 with a short position of Environmental Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Environmental Solutions.
Diversification Opportunities for Continental and Environmental Solutions
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Continental and Environmental is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Continental AG PK and Environmental Solutions Worldw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmental Solutions and Continental 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 AG PK are associated (or correlated) with Environmental Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmental Solutions has no effect on the direction of Continental i.e., Continental and Environmental Solutions go up and down completely randomly.
Pair Corralation between Continental and Environmental Solutions
If you would invest 614.00 in Continental AG PK on September 2, 2024 and sell it today you would earn a total of 34.00 from holding Continental AG PK or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Continental AG PK vs. Environmental Solutions Worldw
Performance |
| Timeline |
| Continental AG PK |
| Environmental Solutions |
Continental and Environmental Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Environmental Solutions
The main advantage of trading using opposite Continental and Environmental Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Environmental Solutions 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 Environmental Solutions will offset losses from the drop in Environmental Solutions' long position.| Continental vs. Compagnie Gnrale des | Continental vs. Bridgestone Corp ADR | Continental vs. Continental Aktiengesellschaft | Continental vs. Douglas Dynamics |
| Environmental Solutions vs. Luminar Technologies | Environmental Solutions vs. Innoviz Technologies | Environmental Solutions vs. Quantumscape Corp | Environmental Solutions vs. Aeva Technologies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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