Correlation Between HORNBACH Baumarkt and TAIGA BUILDING
Can any of the company-specific risk be diversified away by investing in both HORNBACH Baumarkt and TAIGA BUILDING 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 TAIGA BUILDING 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 TAIGA BUILDING PRODS, you can compare the effects of market volatilities on HORNBACH Baumarkt and TAIGA BUILDING 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 TAIGA BUILDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of HORNBACH Baumarkt and TAIGA BUILDING.
Diversification Opportunities for HORNBACH Baumarkt and TAIGA BUILDING
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HORNBACH and TAIGA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HORNBACH Baumarkt AG and TAIGA BUILDING PRODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAIGA BUILDING PRODS 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 TAIGA BUILDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAIGA BUILDING PRODS has no effect on the direction of HORNBACH Baumarkt i.e., HORNBACH Baumarkt and TAIGA BUILDING go up and down completely randomly.
Pair Corralation between HORNBACH Baumarkt and TAIGA BUILDING
Assuming the 90 days trading horizon HORNBACH Baumarkt AG is expected to generate 1.14 times more return on investment than TAIGA BUILDING. However, HORNBACH Baumarkt is 1.14 times more volatile than TAIGA BUILDING PRODS. It trades about 0.03 of its potential returns per unit of risk. TAIGA BUILDING PRODS is currently generating about -0.02 per unit of risk. If you would invest 6,000 in HORNBACH Baumarkt AG on September 13, 2024 and sell it today you would earn a total of 50.00 from holding HORNBACH Baumarkt AG or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HORNBACH Baumarkt AG vs. TAIGA BUILDING PRODS
Performance |
| Timeline |
| HORNBACH Baumarkt |
| TAIGA BUILDING PRODS |
HORNBACH Baumarkt and TAIGA BUILDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HORNBACH Baumarkt and TAIGA BUILDING
The main advantage of trading using opposite HORNBACH Baumarkt and TAIGA BUILDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HORNBACH Baumarkt position performs unexpectedly, TAIGA BUILDING 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 TAIGA BUILDING will offset losses from the drop in TAIGA BUILDING's long position.| HORNBACH Baumarkt vs. BURLINGTON STORES | HORNBACH Baumarkt vs. Retail Estates NV | HORNBACH Baumarkt vs. PICKN PAY STORES | HORNBACH Baumarkt vs. Sekisui Chemical Co |
| TAIGA BUILDING vs. The Home Depot | TAIGA BUILDING vs. The Home Depot | TAIGA BUILDING vs. Floor Decor Holdings | TAIGA BUILDING vs. LESLIES INC DL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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