Correlation Between MTU Aero and Symrise Ag
Can any of the company-specific risk be diversified away by investing in both MTU Aero and Symrise 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 MTU Aero and Symrise Ag into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTU Aero Engines and Symrise Ag PK, you can compare the effects of market volatilities on MTU Aero and Symrise 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 MTU Aero with a short position of Symrise Ag. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and Symrise Ag.
Diversification Opportunities for MTU Aero and Symrise Ag
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTU and Symrise is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines and Symrise Ag PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symrise Ag PK and MTU Aero 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 MTU Aero Engines are associated (or correlated) with Symrise Ag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symrise Ag PK has no effect on the direction of MTU Aero i.e., MTU Aero and Symrise Ag go up and down completely randomly.
Pair Corralation between MTU Aero and Symrise Ag
Assuming the 90 days horizon MTU Aero Engines is expected to generate 1.76 times more return on investment than Symrise Ag. However, MTU Aero is 1.76 times more volatile than Symrise Ag PK. It trades about 0.05 of its potential returns per unit of risk. Symrise Ag PK is currently generating about -0.43 per unit of risk. If you would invest 32,380 in MTU Aero Engines on August 28, 2024 and sell it today you would earn a total of 534.00 from holding MTU Aero Engines or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTU Aero Engines vs. Symrise Ag PK
Performance |
| Timeline |
| MTU Aero Engines |
| Symrise Ag PK |
MTU Aero and Symrise Ag Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTU Aero and Symrise Ag
The main advantage of trading using opposite MTU Aero and Symrise Ag positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero position performs unexpectedly, Symrise 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 Symrise Ag will offset losses from the drop in Symrise Ag's long position.The idea behind MTU Aero Engines and Symrise Ag PK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Symrise Ag vs. Givaudan SA ADR | Symrise Ag vs. Sysmex Corp | Symrise Ag vs. Shin Etsu Chemical Co | Symrise Ag vs. Brenntag AG ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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