Correlation Between North American and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both North American and Continental Aktiengesellscha 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 North American and Continental Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and Continental Aktiengesellschaft, you can compare the effects of market volatilities on North American and Continental Aktiengesellscha 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 North American with a short position of Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Continental Aktiengesellscha.
Diversification Opportunities for North American and Continental Aktiengesellscha
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Continental is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and North American 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 North American Construction are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of North American i.e., North American and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between North American and Continental Aktiengesellscha
Assuming the 90 days horizon North American is expected to generate 1.29 times less return on investment than Continental Aktiengesellscha. In addition to that, North American is 1.07 times more volatile than Continental Aktiengesellschaft. It trades about 0.12 of its total potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.17 per unit of volatility. If you would invest 5,162 in Continental Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 1,488 from holding Continental Aktiengesellschaft or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. Continental Aktiengesellschaft
Performance |
| Timeline |
| North American Const |
| Continental Aktiengesellscha |
North American and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Continental Aktiengesellscha
The main advantage of trading using opposite North American and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Continental Aktiengesellscha 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 Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.| North American vs. Tenaris SA | North American vs. NOV Inc | North American vs. Superior Plus Corp | North American vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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