Correlation Between MTU Aero and EVN AG
Can any of the company-specific risk be diversified away by investing in both MTU Aero and EVN 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 EVN 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 EVN AG, you can compare the effects of market volatilities on MTU Aero and EVN 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 EVN AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and EVN AG.
Diversification Opportunities for MTU Aero and EVN AG
Excellent diversification
The 3 months correlation between MTU and EVN is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines and EVN AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG 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 EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG has no effect on the direction of MTU Aero i.e., MTU Aero and EVN AG go up and down completely randomly.
Pair Corralation between MTU Aero and EVN AG
Assuming the 90 days trading horizon MTU Aero Engines is expected to generate 0.87 times more return on investment than EVN AG. However, MTU Aero Engines is 1.15 times less risky than EVN AG. It trades about 0.15 of its potential returns per unit of risk. EVN AG is currently generating about -0.18 per unit of risk. If you would invest 26,510 in MTU Aero Engines on November 2, 2024 and sell it today you would earn a total of 6,240 from holding MTU Aero Engines or generate 23.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTU Aero Engines vs. EVN AG
Performance |
| Timeline |
| MTU Aero Engines |
| EVN AG |
MTU Aero and EVN AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTU Aero and EVN AG
The main advantage of trading using opposite MTU Aero and EVN AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero position performs unexpectedly, EVN 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 EVN AG will offset losses from the drop in EVN AG's long position.| MTU Aero vs. Raytheon Technologies Corp | MTU Aero vs. The Boeing | MTU Aero vs. Lockheed Martin | MTU Aero vs. Lockheed Martin |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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