Correlation Between NYSE Composite and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Rheinmetall 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 NYSE Composite and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Rheinmetall AG, you can compare the effects of market volatilities on NYSE Composite and Rheinmetall 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 NYSE Composite with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Rheinmetall.
Diversification Opportunities for NYSE Composite and Rheinmetall
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Rheinmetall is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and NYSE Composite 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 NYSE Composite are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of NYSE Composite i.e., NYSE Composite and Rheinmetall go up and down completely randomly.
Pair Corralation between NYSE Composite and Rheinmetall
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.26 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, NYSE Composite is 5.04 times less risky than Rheinmetall. It trades about 0.41 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 50,975 in Rheinmetall AG on September 2, 2024 and sell it today you would earn a total of 15,333 from holding Rheinmetall AG or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Rheinmetall AG
Performance |
| Timeline |
NYSE Composite and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Rheinmetall AG
Pair trading matchups for Rheinmetall
Pair Trading with NYSE Composite and Rheinmetall
The main advantage of trading using opposite NYSE Composite and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Rheinmetall vs. Firan Technology Group | Rheinmetall vs. 808 Renewable Energy | Rheinmetall vs. Park Electrochemical | Rheinmetall vs. Innovative Solutions and |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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