Correlation Between EnviTec Biogas and VERBUND AG
Can any of the company-specific risk be diversified away by investing in both EnviTec Biogas and VERBUND AG 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 EnviTec Biogas and VERBUND AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnviTec Biogas AG and VERBUND AG ADR, you can compare the effects of market volatilities on EnviTec Biogas and VERBUND AG 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 EnviTec Biogas with a short position of VERBUND AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnviTec Biogas and VERBUND AG.
Diversification Opportunities for EnviTec Biogas and VERBUND AG
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EnviTec and VERBUND is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EnviTec Biogas AG and VERBUND AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG ADR and EnviTec Biogas 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 EnviTec Biogas AG are associated (or correlated) with VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG ADR has no effect on the direction of EnviTec Biogas i.e., EnviTec Biogas and VERBUND AG go up and down completely randomly.
Pair Corralation between EnviTec Biogas and VERBUND AG
Assuming the 90 days horizon EnviTec Biogas AG is expected to under-perform the VERBUND AG. In addition to that, EnviTec Biogas is 1.29 times more volatile than VERBUND AG ADR. It trades about -0.02 of its total potential returns per unit of risk. VERBUND AG ADR is currently generating about -0.03 per unit of volatility. If you would invest 1,520 in VERBUND AG ADR on November 2, 2024 and sell it today you would lose (90.00) from holding VERBUND AG ADR or give up 5.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnviTec Biogas AG vs. VERBUND AG ADR
Performance |
| Timeline |
| EnviTec Biogas AG |
| VERBUND AG ADR |
EnviTec Biogas and VERBUND AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnviTec Biogas and VERBUND AG
The main advantage of trading using opposite EnviTec Biogas and VERBUND AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnviTec Biogas position performs unexpectedly, VERBUND AG 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 VERBUND AG will offset losses from the drop in VERBUND AG's long position.| EnviTec Biogas vs. Ormat Technologies | EnviTec Biogas vs. Neoen SA | EnviTec Biogas vs. Encavis AG | EnviTec Biogas vs. TOHOKU EL PWR |
| VERBUND AG vs. TOMBADOR IRON LTD | VERBUND AG vs. MOUNT GIBSON IRON | VERBUND AG vs. Penta Ocean Construction Co | VERBUND AG vs. KOBE STEEL LTD |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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