Correlation Between Carl Zeiss and Alcon AG
Can any of the company-specific risk be diversified away by investing in both Carl Zeiss and Alcon AG 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 Carl Zeiss and Alcon AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carl Zeiss Meditec and Alcon AG, you can compare the effects of market volatilities on Carl Zeiss and Alcon AG 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 Carl Zeiss with a short position of Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carl Zeiss and Alcon AG.
Diversification Opportunities for Carl Zeiss and Alcon AG
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carl and Alcon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Carl Zeiss Meditec and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and Carl Zeiss 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 Carl Zeiss Meditec are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Carl Zeiss i.e., Carl Zeiss and Alcon AG go up and down completely randomly.
Pair Corralation between Carl Zeiss and Alcon AG
Assuming the 90 days horizon Carl Zeiss Meditec is expected to under-perform the Alcon AG. In addition to that, Carl Zeiss is 1.74 times more volatile than Alcon AG. It trades about -0.07 of its total potential returns per unit of risk. Alcon AG is currently generating about 0.03 per unit of volatility. If you would invest 7,376 in Alcon AG on October 21, 2024 and sell it today you would earn a total of 1,061 from holding Alcon AG or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carl Zeiss Meditec vs. Alcon AG
Performance |
| Timeline |
| Carl Zeiss Meditec |
| Alcon AG |
Carl Zeiss and Alcon AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carl Zeiss and Alcon AG
The main advantage of trading using opposite Carl Zeiss and Alcon AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carl Zeiss position performs unexpectedly, Alcon AG 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 Alcon AG will offset losses from the drop in Alcon AG's long position.| Carl Zeiss vs. Coloplast A | Carl Zeiss vs. EssilorLuxottica Socit anonyme | Carl Zeiss vs. Carl Zeiss Meditec | Carl Zeiss vs. Hoya Corp |
| Alcon AG vs. Teleflex Incorporated | Alcon AG vs. West Pharmaceutical Services | Alcon AG vs. ResMed Inc | Alcon AG vs. ICU Medical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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