Correlation Between HORNBACH Baumarkt and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both HORNBACH Baumarkt and Hoist Finance 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 HORNBACH Baumarkt and Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HORNBACH Baumarkt AG and Hoist Finance AB, you can compare the effects of market volatilities on HORNBACH Baumarkt and Hoist Finance 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 HORNBACH Baumarkt with a short position of Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of HORNBACH Baumarkt and Hoist Finance.
Diversification Opportunities for HORNBACH Baumarkt and Hoist Finance
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HORNBACH and Hoist is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding HORNBACH Baumarkt AG and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB and HORNBACH Baumarkt 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 HORNBACH Baumarkt AG are associated (or correlated) with Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of HORNBACH Baumarkt i.e., HORNBACH Baumarkt and Hoist Finance go up and down completely randomly.
Pair Corralation between HORNBACH Baumarkt and Hoist Finance
Assuming the 90 days trading horizon HORNBACH Baumarkt AG is expected to generate 0.57 times more return on investment than Hoist Finance. However, HORNBACH Baumarkt AG is 1.77 times less risky than Hoist Finance. It trades about 0.17 of its potential returns per unit of risk. Hoist Finance AB is currently generating about -0.02 per unit of risk. If you would invest 6,000 in HORNBACH Baumarkt AG on October 28, 2024 and sell it today you would earn a total of 300.00 from holding HORNBACH Baumarkt AG or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HORNBACH Baumarkt AG vs. Hoist Finance AB
Performance |
| Timeline |
| HORNBACH Baumarkt |
| Hoist Finance AB |
HORNBACH Baumarkt and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HORNBACH Baumarkt and Hoist Finance
The main advantage of trading using opposite HORNBACH Baumarkt and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HORNBACH Baumarkt position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| HORNBACH Baumarkt vs. Spirent Communications plc | HORNBACH Baumarkt vs. Mobilezone Holding AG | HORNBACH Baumarkt vs. PULSION Medical Systems | HORNBACH Baumarkt vs. Iridium Communications |
| Hoist Finance vs. Austevoll Seafood ASA | Hoist Finance vs. Fast Retailing Co | Hoist Finance vs. United Natural Foods | Hoist Finance vs. Burlington Stores |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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