Correlation Between National Retail and AlzChem Group
Can any of the company-specific risk be diversified away by investing in both National Retail and AlzChem Group 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 National Retail and AlzChem Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and AlzChem Group AG, you can compare the effects of market volatilities on National Retail and AlzChem Group 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 National Retail with a short position of AlzChem Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and AlzChem Group.
Diversification Opportunities for National Retail and AlzChem Group
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and AlzChem is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and AlzChem Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzChem Group AG and National Retail 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 National Retail Properties are associated (or correlated) with AlzChem Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzChem Group AG has no effect on the direction of National Retail i.e., National Retail and AlzChem Group go up and down completely randomly.
Pair Corralation between National Retail and AlzChem Group
Assuming the 90 days trading horizon National Retail is expected to generate 46.15 times less return on investment than AlzChem Group. But when comparing it to its historical volatility, National Retail Properties is 2.84 times less risky than AlzChem Group. It trades about 0.01 of its potential returns per unit of risk. AlzChem Group AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 5,380 in AlzChem Group AG on September 12, 2024 and sell it today you would earn a total of 760.00 from holding AlzChem Group AG or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Retail Properties vs. AlzChem Group AG
Performance |
| Timeline |
| National Retail Prop |
| AlzChem Group AG |
National Retail and AlzChem Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and AlzChem Group
The main advantage of trading using opposite National Retail and AlzChem Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, AlzChem Group 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 AlzChem Group will offset losses from the drop in AlzChem Group's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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