Correlation Between ODP Corp and Ceconomy
Can any of the company-specific risk be diversified away by investing in both ODP Corp and Ceconomy 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 ODP Corp and Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ODP Corp and Ceconomy AG ADR, you can compare the effects of market volatilities on ODP Corp and Ceconomy 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 ODP Corp with a short position of Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ODP Corp and Ceconomy.
Diversification Opportunities for ODP Corp and Ceconomy
Average diversification
The 3 months correlation between ODP and Ceconomy is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ODP Corp and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR and ODP Corp 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 ODP Corp are associated (or correlated) with Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of ODP Corp i.e., ODP Corp and Ceconomy go up and down completely randomly.
Pair Corralation between ODP Corp and Ceconomy
Considering the 90-day investment horizon ODP Corp is expected to under-perform the Ceconomy. But the stock apears to be less risky and, when comparing its historical volatility, ODP Corp is 1.44 times less risky than Ceconomy. The stock trades about -0.06 of its potential returns per unit of risk. The Ceconomy AG ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Ceconomy AG ADR on September 1, 2024 and sell it today you would lose (5.00) from holding Ceconomy AG ADR or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ODP Corp vs. Ceconomy AG ADR
Performance |
| Timeline |
| ODP Corp |
| Ceconomy AG ADR |
ODP Corp and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ODP Corp and Ceconomy
The main advantage of trading using opposite ODP Corp and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ODP Corp position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy's long position.| ODP Corp vs. Leslies | ODP Corp vs. Sally Beauty Holdings | ODP Corp vs. 1 800 FLOWERSCOM | ODP Corp vs. Caseys General Stores |
| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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