Correlation Between Dana and Continental
Can any of the company-specific risk be diversified away by investing in both Dana and Continental 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 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 AG PK, you can compare the effects of market volatilities on Dana and Continental 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Continental.
Diversification Opportunities for Dana and Continental
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dana and Continental is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of Dana i.e., Dana and Continental go up and down completely randomly.
Pair Corralation between Dana and Continental
Considering the 90-day investment horizon Dana Inc is expected to under-perform the Continental. In addition to that, Dana is 1.16 times more volatile than Continental AG PK. It trades about -0.1 of its total potential returns per unit of risk. Continental AG PK is currently generating about 0.0 per unit of volatility. If you would invest 666.00 in Continental AG PK on August 26, 2024 and sell it today you would lose (27.00) from holding Continental AG PK or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Continental AG PK
Performance |
| Timeline |
| Dana Inc |
| Continental AG PK |
Dana and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Continental
The main advantage of trading using opposite Dana and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Continental 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 will offset losses from the drop in Continental's long position.The idea behind Dana Inc and Continental AG PK 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.| Continental vs. FitLife Brands, Common | Continental vs. HUMANA INC | Continental vs. SCOR PK | Continental vs. Aquagold International |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |