Correlation Between KWS SAAT and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both KWS SAAT and Archer Daniels 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 KWS SAAT and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KWS SAAT SE and Archer Daniels Midland, you can compare the effects of market volatilities on KWS SAAT and Archer Daniels 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 KWS SAAT with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWS SAAT and Archer Daniels.
Diversification Opportunities for KWS SAAT and Archer Daniels
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KWS and Archer is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KWS SAAT SE and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and KWS SAAT 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 KWS SAAT SE are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of KWS SAAT i.e., KWS SAAT and Archer Daniels go up and down completely randomly.
Pair Corralation between KWS SAAT and Archer Daniels
Assuming the 90 days horizon KWS SAAT SE is expected to under-perform the Archer Daniels. In addition to that, KWS SAAT is 1.01 times more volatile than Archer Daniels Midland. It trades about -0.11 of its total potential returns per unit of risk. Archer Daniels Midland is currently generating about 0.08 per unit of volatility. If you would invest 5,020 in Archer Daniels Midland on September 4, 2024 and sell it today you would earn a total of 154.00 from holding Archer Daniels Midland or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KWS SAAT SE vs. Archer Daniels Midland
Performance |
| Timeline |
| KWS SAAT SE |
| Archer Daniels Midland |
KWS SAAT and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KWS SAAT and Archer Daniels
The main advantage of trading using opposite KWS SAAT and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWS SAAT position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| KWS SAAT vs. Archer Daniels Midland | KWS SAAT vs. Tyson Foods | KWS SAAT vs. Wilmar International Limited | KWS SAAT vs. SalMar ASA |
| Archer Daniels vs. KAUFMAN ET BROAD | Archer Daniels vs. Air Transport Services | Archer Daniels vs. Broadcom | Archer Daniels vs. MGIC INVESTMENT |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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