Correlation Between NordTelekom Telecommunicatio and Commerzbank
Can any of the company-specific risk be diversified away by investing in both NordTelekom Telecommunicatio and Commerzbank 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 NordTelekom Telecommunicatio and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NordTelekom Telecommunications Service and Commerzbank AG, you can compare the effects of market volatilities on NordTelekom Telecommunicatio and Commerzbank 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 NordTelekom Telecommunicatio with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NordTelekom Telecommunicatio and Commerzbank.
Diversification Opportunities for NordTelekom Telecommunicatio and Commerzbank
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between NordTelekom and Commerzbank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NordTelekom Telecommunications and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and NordTelekom Telecommunicatio 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 NordTelekom Telecommunications Service are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of NordTelekom Telecommunicatio i.e., NordTelekom Telecommunicatio and Commerzbank go up and down completely randomly.
Pair Corralation between NordTelekom Telecommunicatio and Commerzbank
Assuming the 90 days trading horizon NordTelekom Telecommunications Service is expected to under-perform the Commerzbank. In addition to that, NordTelekom Telecommunicatio is 1.26 times more volatile than Commerzbank AG. It trades about -0.02 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.12 per unit of volatility. If you would invest 418,979 in Commerzbank AG on August 25, 2024 and sell it today you would earn a total of 204,421 from holding Commerzbank AG or generate 48.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.56% |
| Values | Daily Returns |
NordTelekom Telecommunications vs. Commerzbank AG
Performance |
| Timeline |
| NordTelekom Telecommunicatio |
| Commerzbank AG |
NordTelekom Telecommunicatio and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NordTelekom Telecommunicatio and Commerzbank
The main advantage of trading using opposite NordTelekom Telecommunicatio and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NordTelekom Telecommunicatio position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| NordTelekom Telecommunicatio vs. OTP Bank Nyrt | NordTelekom Telecommunicatio vs. MOL Nyrt | NordTelekom Telecommunicatio vs. OPUS GLOBAL Nyrt | NordTelekom Telecommunicatio vs. ALTEO Energiaszolgaltato Nyrt |
| Commerzbank vs. OTP Bank Nyrt | Commerzbank vs. MOL Nyrt | Commerzbank vs. OPUS GLOBAL Nyrt | Commerzbank vs. ALTEO Energiaszolgaltato Nyrt |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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