Correlation Between Metso Outotec and Continental
Can any of the company-specific risk be diversified away by investing in both Metso Outotec and Continental 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 Metso Outotec and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metso Outotec Oyj and Camden Property Trust, you can compare the effects of market volatilities on Metso Outotec and Continental 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 Metso Outotec with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metso Outotec and Continental.
Diversification Opportunities for Metso Outotec and Continental
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metso and Continental is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metso Outotec Oyj and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and Metso Outotec 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 Metso Outotec Oyj are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Metso Outotec i.e., Metso Outotec and Continental go up and down completely randomly.
Pair Corralation between Metso Outotec and Continental
Assuming the 90 days horizon Metso Outotec Oyj is expected to generate 1.43 times more return on investment than Continental. However, Metso Outotec is 1.43 times more volatile than Camden Property Trust. It trades about 0.01 of its potential returns per unit of risk. Camden Property Trust is currently generating about 0.01 per unit of risk. If you would invest 970.00 in Metso Outotec Oyj on November 5, 2024 and sell it today you would earn a total of 3.00 from holding Metso Outotec Oyj or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metso Outotec Oyj vs. Camden Property Trust
Performance |
| Timeline |
| Metso Outotec Oyj |
| Camden Property Trust |
Metso Outotec and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metso Outotec and Continental
The main advantage of trading using opposite Metso Outotec and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metso Outotec position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Metso Outotec vs. ATOSS SOFTWARE | Metso Outotec vs. CyberArk Software | Metso Outotec vs. OPERA SOFTWARE | Metso Outotec vs. ASURE SOFTWARE |
| Continental vs. Nippon Steel | Continental vs. ARISTOCRAT LEISURE | Continental vs. MOUNT GIBSON IRON | Continental vs. PLAYWAY SA ZY 10 |
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 Stocks Directory module to find actively traded stocks across global markets.
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