Correlation Between Grifols SA and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Grifols SA and Bayer 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 Grifols SA and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grifols SA ADR and Bayer AG PK, you can compare the effects of market volatilities on Grifols SA and Bayer 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 Grifols SA with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grifols SA and Bayer AG.
Diversification Opportunities for Grifols SA and Bayer AG
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Grifols and Bayer is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA ADR and Bayer AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG PK and Grifols SA 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 Grifols SA ADR are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG PK has no effect on the direction of Grifols SA i.e., Grifols SA and Bayer AG go up and down completely randomly.
Pair Corralation between Grifols SA and Bayer AG
If you would invest 1,686 in Bayer AG PK on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Bayer AG PK or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Grifols SA ADR vs. Bayer AG PK
Performance |
| Timeline |
| Grifols SA ADR |
| Bayer AG PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Grifols SA and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grifols SA and Bayer AG
The main advantage of trading using opposite Grifols SA and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grifols SA position performs unexpectedly, Bayer 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Grifols SA vs. Novartis AG ADR | Grifols SA vs. AstraZeneca PLC ADR | Grifols SA vs. GlaxoSmithKline PLC ADR | Grifols SA vs. Roche Holding Ltd |
| Bayer AG vs. Novartis AG ADR | Bayer AG vs. Sanofi ADR | Bayer AG vs. AstraZeneca PLC ADR | Bayer AG vs. GlaxoSmithKline PLC ADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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