Correlation Between DFS Furniture and RATIONAL Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and RATIONAL 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 DFS Furniture and RATIONAL Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and RATIONAL Aktiengesellschaft, you can compare the effects of market volatilities on DFS Furniture and RATIONAL 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 DFS Furniture with a short position of RATIONAL Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and RATIONAL Aktiengesellscha.
Diversification Opportunities for DFS Furniture and RATIONAL Aktiengesellscha
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and RATIONAL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of DFS Furniture i.e., DFS Furniture and RATIONAL Aktiengesellscha go up and down completely randomly.
Pair Corralation between DFS Furniture and RATIONAL Aktiengesellscha
Assuming the 90 days trading horizon DFS Furniture is expected to generate 2.04 times less return on investment than RATIONAL Aktiengesellscha. In addition to that, DFS Furniture is 1.58 times more volatile than RATIONAL Aktiengesellschaft. It trades about 0.01 of its total potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about 0.05 per unit of volatility. If you would invest 61,545 in RATIONAL Aktiengesellschaft on October 28, 2024 and sell it today you would earn a total of 24,255 from holding RATIONAL Aktiengesellschaft or generate 39.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. RATIONAL Aktiengesellschaft
Performance |
| Timeline |
| DFS Furniture PLC |
| RATIONAL Aktiengesellscha |
DFS Furniture and RATIONAL Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and RATIONAL Aktiengesellscha
The main advantage of trading using opposite DFS Furniture and RATIONAL Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, RATIONAL 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 RATIONAL Aktiengesellscha will offset losses from the drop in RATIONAL Aktiengesellscha's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| RATIONAL Aktiengesellscha vs. Electronic Arts | RATIONAL Aktiengesellscha vs. STMicroelectronics NV | RATIONAL Aktiengesellscha vs. FRACTAL GAMING GROUP | RATIONAL Aktiengesellscha vs. Richardson Electronics |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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