Correlation Between Intuitive Investments and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Intuitive Investments and Rheinmetall 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 Intuitive Investments and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuitive Investments Group and Rheinmetall AG, you can compare the effects of market volatilities on Intuitive Investments and Rheinmetall 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 Intuitive Investments with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Investments and Rheinmetall.
Diversification Opportunities for Intuitive Investments and Rheinmetall
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Intuitive and Rheinmetall is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Investments Group and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and Intuitive Investments 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 Intuitive Investments Group are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Intuitive Investments i.e., Intuitive Investments and Rheinmetall go up and down completely randomly.
Pair Corralation between Intuitive Investments and Rheinmetall
Assuming the 90 days trading horizon Intuitive Investments Group is expected to generate 2.34 times more return on investment than Rheinmetall. However, Intuitive Investments is 2.34 times more volatile than Rheinmetall AG. It trades about 0.07 of its potential returns per unit of risk. Rheinmetall AG is currently generating about -0.07 per unit of risk. If you would invest 12,450 in Intuitive Investments Group on October 10, 2024 and sell it today you would earn a total of 450.00 from holding Intuitive Investments Group or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intuitive Investments Group vs. Rheinmetall AG
Performance |
| Timeline |
| Intuitive Investments |
| Rheinmetall AG |
Intuitive Investments and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuitive Investments and Rheinmetall
The main advantage of trading using opposite Intuitive Investments and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Investments position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.The idea behind Intuitive Investments Group and Rheinmetall AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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