Correlation Between Dana and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Dana and Continental Aktiengesellscha 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 Dana and Continental Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and Continental Aktiengesellschaft, you can compare the effects of market volatilities on Dana and Continental Aktiengesellscha 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 Dana with a short position of Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Continental Aktiengesellscha.
Diversification Opportunities for Dana and Continental Aktiengesellscha
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dana and Continental is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and Dana 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 Dana Inc are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Dana i.e., Dana and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between Dana and Continental Aktiengesellscha
Considering the 90-day investment horizon Dana is expected to generate 2.7 times less return on investment than Continental Aktiengesellscha. In addition to that, Dana is 1.37 times more volatile than Continental Aktiengesellschaft. It trades about 0.03 of its total potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.13 per unit of volatility. If you would invest 6,010 in Continental Aktiengesellschaft on August 30, 2024 and sell it today you would earn a total of 610.00 from holding Continental Aktiengesellschaft or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Continental Aktiengesellschaft
Performance |
| Timeline |
| Dana Inc |
| Continental Aktiengesellscha |
Dana and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Continental Aktiengesellscha
The main advantage of trading using opposite Dana and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Continental Aktiengesellscha 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.The idea behind Dana Inc and Continental Aktiengesellschaft 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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