Correlation Between Porsche Automobile and Transat AT
Can any of the company-specific risk be diversified away by investing in both Porsche Automobile and Transat AT 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 Porsche Automobile and Transat AT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobile Holding and Transat AT, you can compare the effects of market volatilities on Porsche Automobile and Transat AT 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 Porsche Automobile with a short position of Transat AT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobile and Transat AT.
Diversification Opportunities for Porsche Automobile and Transat AT
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Porsche and Transat is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and Transat AT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transat AT and Porsche Automobile 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 Porsche Automobile Holding are associated (or correlated) with Transat AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transat AT has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and Transat AT go up and down completely randomly.
Pair Corralation between Porsche Automobile and Transat AT
Assuming the 90 days horizon Porsche Automobile Holding is expected to generate 0.61 times more return on investment than Transat AT. However, Porsche Automobile Holding is 1.64 times less risky than Transat AT. It trades about -0.04 of its potential returns per unit of risk. Transat AT is currently generating about -0.03 per unit of risk. If you would invest 528.00 in Porsche Automobile Holding on September 2, 2024 and sell it today you would lose (168.00) from holding Porsche Automobile Holding or give up 31.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Porsche Automobile Holding vs. Transat AT
Performance |
| Timeline |
| Porsche Automobile |
| Transat AT |
Porsche Automobile and Transat AT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobile and Transat AT
The main advantage of trading using opposite Porsche Automobile and Transat AT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobile position performs unexpectedly, Transat AT 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 Transat AT will offset losses from the drop in Transat AT's long position.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Bayerische Motoren Werke | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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