Correlation Between Garofalo Health and Varta AG
Can any of the company-specific risk be diversified away by investing in both Garofalo Health and Varta 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 Garofalo Health and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garofalo Health Care and Varta AG, you can compare the effects of market volatilities on Garofalo Health and Varta 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 Garofalo Health with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garofalo Health and Varta AG.
Diversification Opportunities for Garofalo Health and Varta AG
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Garofalo and Varta is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Garofalo Health Care and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Garofalo 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 Garofalo Health Care are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Garofalo Health i.e., Garofalo Health and Varta AG go up and down completely randomly.
Pair Corralation between Garofalo Health and Varta AG
Assuming the 90 days horizon Garofalo Health Care is expected to generate 0.19 times more return on investment than Varta AG. However, Garofalo Health Care is 5.16 times less risky than Varta AG. It trades about -0.14 of its potential returns per unit of risk. Varta AG is currently generating about -0.12 per unit of risk. If you would invest 546.00 in Garofalo Health Care on October 12, 2024 and sell it today you would lose (18.00) from holding Garofalo Health Care or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Garofalo Health Care vs. Varta AG
Performance |
| Timeline |
| Garofalo Health Care |
| Varta AG |
Garofalo Health and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garofalo Health and Varta AG
The main advantage of trading using opposite Garofalo Health and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garofalo Health position performs unexpectedly, Varta 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 Varta AG will offset losses from the drop in Varta AG's long position.| Garofalo Health vs. QBE Insurance Group | Garofalo Health vs. THORNEY TECHS LTD | Garofalo Health vs. UNIQA INSURANCE GR | Garofalo Health vs. GLG LIFE TECH |
| Varta AG vs. Garofalo Health Care | Varta AG vs. JAPAN AIRLINES | Varta AG vs. US Physical Therapy | Varta AG vs. Southwest Airlines Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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