Correlation Between GMO Internet and Talanx AG
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Talanx 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 GMO Internet and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Talanx AG, you can compare the effects of market volatilities on GMO Internet and Talanx 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 GMO Internet with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Talanx AG.
Diversification Opportunities for GMO Internet and Talanx AG
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GMO and Talanx is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and GMO Internet 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 GMO Internet are associated (or correlated) with Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of GMO Internet i.e., GMO Internet and Talanx AG go up and down completely randomly.
Pair Corralation between GMO Internet and Talanx AG
Assuming the 90 days horizon GMO Internet is expected to under-perform the Talanx AG. In addition to that, GMO Internet is 1.14 times more volatile than Talanx AG. It trades about -0.19 of its total potential returns per unit of risk. Talanx AG is currently generating about -0.08 per unit of volatility. If you would invest 8,550 in Talanx AG on October 11, 2024 and sell it today you would lose (170.00) from holding Talanx AG or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
GMO Internet vs. Talanx AG
Performance |
| Timeline |
| GMO Internet |
| Talanx AG |
GMO Internet and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Talanx AG
The main advantage of trading using opposite GMO Internet and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Talanx 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| GMO Internet vs. SIERRA METALS | GMO Internet vs. Easy Software AG | GMO Internet vs. Axway Software SA | GMO Internet vs. Forsys Metals Corp |
| Talanx AG vs. Shenandoah Telecommunications | Talanx AG vs. International Game Technology | Talanx AG vs. GMO Internet | Talanx AG vs. BRAGG GAMING 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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