Correlation Between Hannover Rück and Varta AG
Can any of the company-specific risk be diversified away by investing in both Hannover Rück 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 Hannover Rück and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannover Rck SE and Varta AG, you can compare the effects of market volatilities on Hannover Rück 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 Hannover Rück with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannover Rück and Varta AG.
Diversification Opportunities for Hannover Rück and Varta AG
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hannover and Varta is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hannover Rck SE and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Hannover Rück 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 Hannover Rck SE 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 Hannover Rück i.e., Hannover Rück and Varta AG go up and down completely randomly.
Pair Corralation between Hannover Rück and Varta AG
Assuming the 90 days trading horizon Hannover Rück is expected to generate 2.39 times less return on investment than Varta AG. But when comparing it to its historical volatility, Hannover Rck SE is 12.52 times less risky than Varta AG. It trades about 0.07 of its potential returns per unit of risk. Varta AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,107 in Varta AG on August 28, 2024 and sell it today you would lose (892.00) from holding Varta AG or give up 80.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hannover Rck SE vs. Varta AG
Performance |
| Timeline |
| Hannover Rck SE |
| Varta AG |
Hannover Rück and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannover Rück and Varta AG
The main advantage of trading using opposite Hannover Rück and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannover Rück 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.| Hannover Rück vs. Varta AG | Hannover Rück vs. AGRICUL BK CHINA H | Hannover Rück vs. Nine Dragons Paper | Hannover Rück vs. CAL MAINE FOODS |
| Varta AG vs. CHINA EDUCATION GROUP | Varta AG vs. IDP EDUCATION LTD | Varta AG vs. TAL Education Group | Varta AG vs. DEVRY EDUCATION GRP |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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