Correlation Between EON SE and Deutsche Lufthansa
Can any of the company-specific risk be diversified away by investing in both EON SE and Deutsche Lufthansa 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 EON SE and Deutsche Lufthansa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EON SE and Deutsche Lufthansa AG, you can compare the effects of market volatilities on EON SE and Deutsche Lufthansa 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 EON SE with a short position of Deutsche Lufthansa. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON SE and Deutsche Lufthansa.
Diversification Opportunities for EON SE and Deutsche Lufthansa
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between EON and Deutsche is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding EON SE and Deutsche Lufthansa AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Lufthansa and EON SE 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 EON SE are associated (or correlated) with Deutsche Lufthansa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Lufthansa has no effect on the direction of EON SE i.e., EON SE and Deutsche Lufthansa go up and down completely randomly.
Pair Corralation between EON SE and Deutsche Lufthansa
Assuming the 90 days trading horizon EON SE is expected to generate 0.6 times more return on investment than Deutsche Lufthansa. However, EON SE is 1.66 times less risky than Deutsche Lufthansa. It trades about -0.17 of its potential returns per unit of risk. Deutsche Lufthansa AG is currently generating about -0.26 per unit of risk. If you would invest 511,600 in EON SE on August 28, 2024 and sell it today you would lose (14,600) from holding EON SE or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 69.23% |
| Values | Daily Returns |
EON SE vs. Deutsche Lufthansa AG
Performance |
| Timeline |
| EON SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Deutsche Lufthansa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
EON SE and Deutsche Lufthansa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EON SE and Deutsche Lufthansa
The main advantage of trading using opposite EON SE and Deutsche Lufthansa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON SE position performs unexpectedly, Deutsche Lufthansa 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 Deutsche Lufthansa will offset losses from the drop in Deutsche Lufthansa's long position.| EON SE vs. OTP Bank Nyrt | EON SE vs. MOL Nyrt | EON SE vs. OPUS GLOBAL Nyrt | EON SE vs. ALTEO Energiaszolgaltato Nyrt |
| Deutsche Lufthansa vs. OTP Bank Nyrt | Deutsche Lufthansa vs. MOL Nyrt | Deutsche Lufthansa vs. OPUS GLOBAL Nyrt | Deutsche Lufthansa vs. ALTEO Energiaszolgaltato Nyrt |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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