Correlation Between VERBUND AG and PPL
Can any of the company-specific risk be diversified away by investing in both VERBUND AG and PPL 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 VERBUND AG and PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VERBUND AG and PPL Corporation, you can compare the effects of market volatilities on VERBUND AG and PPL 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 VERBUND AG with a short position of PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERBUND AG and PPL.
Diversification Opportunities for VERBUND AG and PPL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VERBUND and PPL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VERBUND AG and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation and VERBUND AG 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 VERBUND AG are associated (or correlated) with PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of VERBUND AG i.e., VERBUND AG and PPL go up and down completely randomly.
Pair Corralation between VERBUND AG and PPL
Assuming the 90 days trading horizon VERBUND AG is expected to generate 2.34 times less return on investment than PPL. In addition to that, VERBUND AG is 1.46 times more volatile than PPL Corporation. It trades about 0.05 of its total potential returns per unit of risk. PPL Corporation is currently generating about 0.17 per unit of volatility. If you would invest 2,338 in PPL Corporation on August 27, 2024 and sell it today you would earn a total of 975.00 from holding PPL Corporation or generate 41.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VERBUND AG vs. PPL Corp.
Performance |
| Timeline |
| VERBUND AG |
| PPL Corporation |
VERBUND AG and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VERBUND AG and PPL
The main advantage of trading using opposite VERBUND AG and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERBUND AG position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| VERBUND AG vs. NextEra Energy | VERBUND AG vs. The Southern | VERBUND AG vs. American Electric Power | VERBUND AG vs. Eversource Energy |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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