Correlation Between NEW WORLD and Citycon Oyj
Can any of the company-specific risk be diversified away by investing in both NEW WORLD and Citycon Oyj 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 NEW WORLD and Citycon Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW WORLD DEVCO and Citycon Oyj, you can compare the effects of market volatilities on NEW WORLD and Citycon Oyj 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 NEW WORLD with a short position of Citycon Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW WORLD and Citycon Oyj.
Diversification Opportunities for NEW WORLD and Citycon Oyj
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEW and Citycon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NEW WORLD DEVCO and Citycon Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citycon Oyj and NEW WORLD 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 NEW WORLD DEVCO are associated (or correlated) with Citycon Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citycon Oyj has no effect on the direction of NEW WORLD i.e., NEW WORLD and Citycon Oyj go up and down completely randomly.
Pair Corralation between NEW WORLD and Citycon Oyj
Assuming the 90 days trading horizon NEW WORLD DEVCO is expected to under-perform the Citycon Oyj. In addition to that, NEW WORLD is 2.01 times more volatile than Citycon Oyj. It trades about -0.04 of its total potential returns per unit of risk. Citycon Oyj is currently generating about -0.05 per unit of volatility. If you would invest 510.00 in Citycon Oyj on September 24, 2024 and sell it today you would lose (197.00) from holding Citycon Oyj or give up 38.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW WORLD DEVCO vs. Citycon Oyj
Performance |
| Timeline |
| NEW WORLD DEVCO |
| Citycon Oyj |
NEW WORLD and Citycon Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW WORLD and Citycon Oyj
The main advantage of trading using opposite NEW WORLD and Citycon Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW WORLD position performs unexpectedly, Citycon Oyj 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 Citycon Oyj will offset losses from the drop in Citycon Oyj's long position.| NEW WORLD vs. OPEN HOUSE GROUP | NEW WORLD vs. AEON MALL LTD | NEW WORLD vs. Hufvudstaden AB | NEW WORLD vs. FRASERS PROPERTY |
| Citycon Oyj vs. NEW WORLD DEVCO | Citycon Oyj vs. OPEN HOUSE GROUP | Citycon Oyj vs. AEON MALL LTD | Citycon Oyj vs. Hufvudstaden 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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