Correlation Between Equity Residential and Rocket Internet
Can any of the company-specific risk be diversified away by investing in both Equity Residential and Rocket Internet 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 Equity Residential and Rocket Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Residential and Rocket Internet SE, you can compare the effects of market volatilities on Equity Residential and Rocket Internet 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 Equity Residential with a short position of Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Residential and Rocket Internet.
Diversification Opportunities for Equity Residential and Rocket Internet
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Equity and Rocket is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Equity Residential and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet SE and Equity Residential 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 Equity Residential are associated (or correlated) with Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of Equity Residential i.e., Equity Residential and Rocket Internet go up and down completely randomly.
Pair Corralation between Equity Residential and Rocket Internet
Assuming the 90 days horizon Equity Residential is expected to under-perform the Rocket Internet. But the stock apears to be less risky and, when comparing its historical volatility, Equity Residential is 1.47 times less risky than Rocket Internet. The stock trades about -0.17 of its potential returns per unit of risk. The Rocket Internet SE is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Rocket Internet SE on October 12, 2024 and sell it today you would earn a total of 40.00 from holding Rocket Internet SE or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Residential vs. Rocket Internet SE
Performance |
| Timeline |
| Equity Residential |
| Rocket Internet SE |
Equity Residential and Rocket Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Residential and Rocket Internet
The main advantage of trading using opposite Equity Residential and Rocket Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Residential position performs unexpectedly, Rocket Internet 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 Rocket Internet will offset losses from the drop in Rocket Internet's long position.| Equity Residential vs. Rocket Internet SE | Equity Residential vs. Entravision Communications | Equity Residential vs. ARDAGH METAL PACDL 0001 | Equity Residential vs. INTERNET INJPADR 1 |
| Rocket Internet vs. Salesforce | Rocket Internet vs. Superior Plus Corp | Rocket Internet vs. NMI Holdings | Rocket Internet vs. SIVERS SEMICONDUCTORS AB |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |