Correlation Between FEMALE HEALTH and Adidas AG
Can any of the company-specific risk be diversified away by investing in both FEMALE HEALTH and Adidas 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 FEMALE HEALTH and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FEMALE HEALTH and adidas AG, you can compare the effects of market volatilities on FEMALE HEALTH and Adidas 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 FEMALE HEALTH with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and Adidas AG.
Diversification Opportunities for FEMALE HEALTH and Adidas AG
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEMALE and Adidas is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG and FEMALE HEALTH 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 FEMALE HEALTH are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and Adidas AG go up and down completely randomly.
Pair Corralation between FEMALE HEALTH and Adidas AG
Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the Adidas AG. In addition to that, FEMALE HEALTH is 2.99 times more volatile than adidas AG. It trades about -0.02 of its total potential returns per unit of risk. adidas AG is currently generating about 0.06 per unit of volatility. If you would invest 7,639 in adidas AG on October 28, 2024 and sell it today you would earn a total of 4,961 from holding adidas AG or generate 64.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FEMALE HEALTH vs. adidas AG
Performance |
| Timeline |
| FEMALE HEALTH |
| adidas AG |
FEMALE HEALTH and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FEMALE HEALTH and Adidas AG
The main advantage of trading using opposite FEMALE HEALTH and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH position performs unexpectedly, Adidas 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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