Correlation Between VIVA WINE and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both VIVA WINE 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 VIVA WINE and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and Rheinmetall AG, you can compare the effects of market volatilities on VIVA WINE 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 VIVA WINE with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Rheinmetall.
Diversification Opportunities for VIVA WINE and Rheinmetall
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VIVA and Rheinmetall is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and VIVA WINE 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 VIVA WINE 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 VIVA WINE i.e., VIVA WINE and Rheinmetall go up and down completely randomly.
Pair Corralation between VIVA WINE and Rheinmetall
Assuming the 90 days horizon VIVA WINE is expected to generate 6.59 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, VIVA WINE GROUP is 3.54 times less risky than Rheinmetall. It trades about 0.21 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 70,680 in Rheinmetall AG on December 8, 2024 and sell it today you would earn a total of 37,420 from holding Rheinmetall AG or generate 52.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. Rheinmetall AG
Performance |
| Timeline |
| VIVA WINE GROUP |
| Rheinmetall AG |
VIVA WINE and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and Rheinmetall
The main advantage of trading using opposite VIVA WINE and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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.| VIVA WINE vs. Peijia Medical Limited | ||
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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