Correlation Between Deutsche Telekom and EON SE
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom and EON SE 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 Deutsche Telekom and EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and EON SE, you can compare the effects of market volatilities on Deutsche Telekom and EON SE 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 Deutsche Telekom with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and EON SE.
Diversification Opportunities for Deutsche Telekom and EON SE
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Deutsche and EON is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and EON SE go up and down completely randomly.
Pair Corralation between Deutsche Telekom and EON SE
Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 0.55 times more return on investment than EON SE. However, Deutsche Telekom AG is 1.8 times less risky than EON SE. It trades about 0.42 of its potential returns per unit of risk. EON SE is currently generating about -0.09 per unit of risk. If you would invest 2,799 in Deutsche Telekom AG on September 3, 2024 and sell it today you would earn a total of 228.00 from holding Deutsche Telekom AG or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. EON SE
Performance |
| Timeline |
| Deutsche Telekom |
| EON SE |
Deutsche Telekom and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and EON SE
The main advantage of trading using opposite Deutsche Telekom and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| Deutsche Telekom vs. PennantPark Investment | Deutsche Telekom vs. CSSC Offshore Marine | Deutsche Telekom vs. BW OFFSHORE LTD | Deutsche Telekom vs. Gladstone Investment |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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