Correlation Between Subaru Corp and Continental
Can any of the company-specific risk be diversified away by investing in both Subaru Corp and Continental 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 Subaru Corp and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Subaru Corp ADR and Continental AG PK, you can compare the effects of market volatilities on Subaru Corp and Continental 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 Subaru Corp with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subaru Corp and Continental.
Diversification Opportunities for Subaru Corp and Continental
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Subaru and Continental is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Subaru Corp ADR and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK and Subaru Corp 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 Subaru Corp ADR are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of Subaru Corp i.e., Subaru Corp and Continental go up and down completely randomly.
Pair Corralation between Subaru Corp and Continental
Assuming the 90 days horizon Subaru Corp is expected to generate 2.58 times less return on investment than Continental. In addition to that, Subaru Corp is 1.23 times more volatile than Continental AG PK. It trades about 0.07 of its total potential returns per unit of risk. Continental AG PK is currently generating about 0.21 per unit of volatility. If you would invest 665.00 in Continental AG PK on October 24, 2024 and sell it today you would earn a total of 37.00 from holding Continental AG PK or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Subaru Corp ADR vs. Continental AG PK
Performance |
| Timeline |
| Subaru Corp ADR |
| Continental AG PK |
Subaru Corp and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Subaru Corp and Continental
The main advantage of trading using opposite Subaru Corp and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subaru Corp position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Subaru Corp vs. Mazda Motor Corp | Subaru Corp vs. Subaru Corp | Subaru Corp vs. Bridgestone Corp ADR | Subaru Corp vs. Renault SA |
| Continental vs. Compagnie Gnrale des | Continental vs. Bridgestone Corp ADR | Continental vs. Continental Aktiengesellschaft | Continental vs. Douglas Dynamics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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