Correlation Between METTLER TOLEDO and Sparta AG
Can any of the company-specific risk be diversified away by investing in both METTLER TOLEDO and Sparta 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 METTLER TOLEDO and Sparta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METTLER TOLEDO INTL and Sparta AG, you can compare the effects of market volatilities on METTLER TOLEDO and Sparta 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 METTLER TOLEDO with a short position of Sparta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and Sparta AG.
Diversification Opportunities for METTLER TOLEDO and Sparta AG
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METTLER and Sparta is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL and Sparta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta AG and METTLER TOLEDO 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 METTLER TOLEDO INTL are associated (or correlated) with Sparta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta AG has no effect on the direction of METTLER TOLEDO i.e., METTLER TOLEDO and Sparta AG go up and down completely randomly.
Pair Corralation between METTLER TOLEDO and Sparta AG
Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the Sparta AG. But the stock apears to be less risky and, when comparing its historical volatility, METTLER TOLEDO INTL is 1.24 times less risky than Sparta AG. The stock trades about -0.1 of its potential returns per unit of risk. The Sparta AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,440 in Sparta AG on August 24, 2024 and sell it today you would earn a total of 800.00 from holding Sparta AG or generate 32.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METTLER TOLEDO INTL vs. Sparta AG
Performance |
| Timeline |
| METTLER TOLEDO INTL |
| Sparta AG |
METTLER TOLEDO and Sparta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METTLER TOLEDO and Sparta AG
The main advantage of trading using opposite METTLER TOLEDO and Sparta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO position performs unexpectedly, Sparta 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 Sparta AG will offset losses from the drop in Sparta AG's long position.| METTLER TOLEDO vs. Soken Chemical Engineering | METTLER TOLEDO vs. WESTLAKE CHEMICAL | METTLER TOLEDO vs. SEKISUI CHEMICAL | METTLER TOLEDO vs. TIANDE CHEMICAL |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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