Correlation Between Ceconomy and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Ceconomy and Dixons Carphone 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 Ceconomy and Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceconomy AG ADR and Dixons Carphone plc, you can compare the effects of market volatilities on Ceconomy and Dixons Carphone 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 Ceconomy with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceconomy and Dixons Carphone.
Diversification Opportunities for Ceconomy and Dixons Carphone
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceconomy and Dixons is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ceconomy AG ADR and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and Ceconomy 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 Ceconomy AG ADR are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Ceconomy i.e., Ceconomy and Dixons Carphone go up and down completely randomly.
Pair Corralation between Ceconomy and Dixons Carphone
Assuming the 90 days horizon Ceconomy AG ADR is expected to generate 2.66 times more return on investment than Dixons Carphone. However, Ceconomy is 2.66 times more volatile than Dixons Carphone plc. It trades about 0.04 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about -0.33 per unit of risk. If you would invest 58.00 in Ceconomy AG ADR on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Ceconomy AG ADR or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ceconomy AG ADR vs. Dixons Carphone plc
Performance |
| Timeline |
| Ceconomy AG ADR |
| Dixons Carphone plc |
Ceconomy and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceconomy and Dixons Carphone
The main advantage of trading using opposite Ceconomy and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceconomy position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
| Dixons Carphone vs. Verde Clean Fuels | Dixons Carphone vs. Flexible Solutions International | Dixons Carphone vs. Alaska Air Group | Dixons Carphone vs. Consol Energy |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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