Correlation Between North American and STRA Hannoversche
Can any of the company-specific risk be diversified away by investing in both North American and STRA Hannoversche 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 STRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe, you can compare the effects of market volatilities on North American and STRA Hannoversche 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 STRA Hannoversche. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and STRA Hannoversche.
Diversification Opportunities for North American and STRA Hannoversche
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and STRA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRA Hannoversche 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 STRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRA Hannoversche has no effect on the direction of North American i.e., North American and STRA Hannoversche go up and down completely randomly.
Pair Corralation between North American and STRA Hannoversche
Assuming the 90 days horizon North American Construction is expected to generate 1.19 times more return on investment than STRA Hannoversche. However, North American is 1.19 times more volatile than STRA Hannoversche Verkehrsbetriebe. It trades about -0.03 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about -0.04 per unit of risk. If you would invest 2,040 in North American Construction on October 25, 2024 and sell it today you would lose (40.00) from holding North American Construction or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. STRA Hannoversche Verkehrsbetr
Performance |
| Timeline |
| North American Const |
| STRA Hannoversche |
North American and STRA Hannoversche Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and STRA Hannoversche
The main advantage of trading using opposite North American and STRA Hannoversche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, STRA Hannoversche 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 STRA Hannoversche will offset losses from the drop in STRA Hannoversche's long position.| North American vs. VIVA WINE GROUP | North American vs. Easy Software AG | North American vs. Magic Software Enterprises | North American vs. Axway Software SA |
| STRA Hannoversche vs. North American Construction | STRA Hannoversche vs. HANOVER INSURANCE | STRA Hannoversche vs. FARM 51 GROUP | STRA Hannoversche vs. UNIQA INSURANCE GR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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