Correlation Between Linz Textil and Wolford Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Linz Textil and Wolford Aktiengesellscha 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 Linz Textil and Wolford Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linz Textil Holding and Wolford Aktiengesellschaft, you can compare the effects of market volatilities on Linz Textil and Wolford Aktiengesellscha 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 Linz Textil with a short position of Wolford Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linz Textil and Wolford Aktiengesellscha.
Diversification Opportunities for Linz Textil and Wolford Aktiengesellscha
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Linz and Wolford is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Linz Textil Holding and Wolford Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolford Aktiengesellscha and Linz Textil 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 Linz Textil Holding are associated (or correlated) with Wolford Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolford Aktiengesellscha has no effect on the direction of Linz Textil i.e., Linz Textil and Wolford Aktiengesellscha go up and down completely randomly.
Pair Corralation between Linz Textil and Wolford Aktiengesellscha
Assuming the 90 days trading horizon Linz Textil Holding is expected to generate 0.65 times more return on investment than Wolford Aktiengesellscha. However, Linz Textil Holding is 1.54 times less risky than Wolford Aktiengesellscha. It trades about 0.0 of its potential returns per unit of risk. Wolford Aktiengesellschaft is currently generating about -0.04 per unit of risk. If you would invest 22,000 in Linz Textil Holding on August 31, 2024 and sell it today you would lose (1,200) from holding Linz Textil Holding or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linz Textil Holding vs. Wolford Aktiengesellschaft
Performance |
| Timeline |
| Linz Textil Holding |
| Wolford Aktiengesellscha |
Linz Textil and Wolford Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linz Textil and Wolford Aktiengesellscha
The main advantage of trading using opposite Linz Textil and Wolford Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linz Textil position performs unexpectedly, Wolford Aktiengesellscha 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 Wolford Aktiengesellscha will offset losses from the drop in Wolford Aktiengesellscha's long position.| Linz Textil vs. Kapsch Traffic | Linz Textil vs. Wolford Aktiengesellschaft | Linz Textil vs. AMAG Austria Metall | Linz Textil vs. Lenzing Aktiengesellschaft |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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