Correlation Between Geberit AG and VAT Group
Can any of the company-specific risk be diversified away by investing in both Geberit AG and VAT Group 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 Geberit AG and VAT Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geberit AG and VAT Group AG, you can compare the effects of market volatilities on Geberit AG and VAT Group 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 Geberit AG with a short position of VAT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geberit AG and VAT Group.
Diversification Opportunities for Geberit AG and VAT Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Geberit and VAT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG and Geberit AG 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 Geberit AG are associated (or correlated) with VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Geberit AG i.e., Geberit AG and VAT Group go up and down completely randomly.
Pair Corralation between Geberit AG and VAT Group
Assuming the 90 days trading horizon Geberit AG is expected to generate 0.65 times more return on investment than VAT Group. However, Geberit AG is 1.54 times less risky than VAT Group. It trades about -0.08 of its potential returns per unit of risk. VAT Group AG is currently generating about -0.06 per unit of risk. If you would invest 54,080 in Geberit AG on September 1, 2024 and sell it today you would lose (1,040) from holding Geberit AG or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geberit AG vs. VAT Group AG
Performance |
| Timeline |
| Geberit AG |
| VAT Group AG |
Geberit AG and VAT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geberit AG and VAT Group
The main advantage of trading using opposite Geberit AG and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geberit AG position performs unexpectedly, VAT Group 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 VAT Group will offset losses from the drop in VAT Group's long position.The idea behind Geberit AG and VAT Group AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| VAT Group vs. Sika AG | VAT Group vs. Straumann Holding AG | VAT Group vs. Geberit AG | VAT Group vs. Partners Group Holding |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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