Correlation Between Nestl SA and Meyer Burger
Can any of the company-specific risk be diversified away by investing in both Nestl SA and Meyer Burger 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 Nestl SA and Meyer Burger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestl SA and Meyer Burger Tech, you can compare the effects of market volatilities on Nestl SA and Meyer Burger 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 Nestl SA with a short position of Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and Meyer Burger.
Diversification Opportunities for Nestl SA and Meyer Burger
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nestl and Meyer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and Meyer Burger Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Tech and Nestl SA 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 Nestl SA are associated (or correlated) with Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Tech has no effect on the direction of Nestl SA i.e., Nestl SA and Meyer Burger go up and down completely randomly.
Pair Corralation between Nestl SA and Meyer Burger
Assuming the 90 days trading horizon Nestl SA is expected to generate 0.11 times more return on investment than Meyer Burger. However, Nestl SA is 9.06 times less risky than Meyer Burger. It trades about -0.08 of its potential returns per unit of risk. Meyer Burger Tech is currently generating about -0.12 per unit of risk. If you would invest 10,363 in Nestl SA on August 31, 2024 and sell it today you would lose (2,715) from holding Nestl SA or give up 26.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestl SA vs. Meyer Burger Tech
Performance |
| Timeline |
| Nestl SA |
| Meyer Burger Tech |
Nestl SA and Meyer Burger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestl SA and Meyer Burger
The main advantage of trading using opposite Nestl SA and Meyer Burger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestl SA position performs unexpectedly, Meyer Burger 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 Meyer Burger will offset losses from the drop in Meyer Burger's long position.| Nestl SA vs. Novartis AG | Nestl SA vs. Roche Holding AG | Nestl SA vs. Zurich Insurance Group | Nestl SA vs. Swiss Re AG |
| Meyer Burger vs. Jungfraubahn Holding AG | Meyer Burger vs. Amsterdam Commodities NV | Meyer Burger vs. Flow Traders BV | Meyer Burger vs. ForFarmers NV |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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