Correlation Between Expat Poland and Expat Czech
Can any of the company-specific risk be diversified away by investing in both Expat Poland and Expat Czech 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 Expat Poland and Expat Czech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expat Poland WIG20 and Expat Czech PX, you can compare the effects of market volatilities on Expat Poland and Expat Czech 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 Expat Poland with a short position of Expat Czech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expat Poland and Expat Czech.
Diversification Opportunities for Expat Poland and Expat Czech
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Expat and Expat is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Expat Poland WIG20 and Expat Czech PX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Czech PX and Expat Poland 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 Expat Poland WIG20 are associated (or correlated) with Expat Czech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Czech PX has no effect on the direction of Expat Poland i.e., Expat Poland and Expat Czech go up and down completely randomly.
Pair Corralation between Expat Poland and Expat Czech
Assuming the 90 days horizon Expat Poland WIG20 is expected to generate 3.14 times more return on investment than Expat Czech. However, Expat Poland is 3.14 times more volatile than Expat Czech PX. It trades about 0.03 of its potential returns per unit of risk. Expat Czech PX is currently generating about 0.09 per unit of risk. If you would invest 45.00 in Expat Poland WIG20 on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Expat Poland WIG20 or generate 28.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Expat Poland WIG20 vs. Expat Czech PX
Performance |
| Timeline |
| Expat Poland WIG20 |
| Expat Czech PX |
Expat Poland and Expat Czech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expat Poland and Expat Czech
The main advantage of trading using opposite Expat Poland and Expat Czech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expat Poland position performs unexpectedly, Expat Czech 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 Expat Czech will offset losses from the drop in Expat Czech's long position.| Expat Poland vs. UBS Fund Solutions | Expat Poland vs. iShares Core SP | Expat Poland vs. iShares Core MSCI |
| Expat Czech vs. Expat Croatia Crobex | Expat Czech vs. Expat Serbia Belex15 | Expat Czech vs. Expat Poland WIG20 | Expat Czech vs. Expat Slovenia SBI |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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