Correlation Between PROSIEBENSAT1 MEDIADR4/ and NEXANS
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ and NEXANS 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 PROSIEBENSAT1 MEDIADR4/ and NEXANS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and NEXANS, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ and NEXANS 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 PROSIEBENSAT1 MEDIADR4/ with a short position of NEXANS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and NEXANS.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and NEXANS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PROSIEBENSAT1 and NEXANS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and NEXANS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 are associated (or correlated) with NEXANS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and NEXANS go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and NEXANS
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 2.12 times more return on investment than NEXANS. However, PROSIEBENSAT1 MEDIADR4/ is 2.12 times more volatile than NEXANS. It trades about -0.14 of its potential returns per unit of risk. NEXANS is currently generating about -0.33 per unit of risk. If you would invest 132.00 in PROSIEBENSAT1 MEDIADR4 on October 10, 2024 and sell it today you would lose (8.00) from holding PROSIEBENSAT1 MEDIADR4 or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. NEXANS
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| NEXANS |
PROSIEBENSAT1 MEDIADR4/ and NEXANS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and NEXANS
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and NEXANS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ position performs unexpectedly, NEXANS 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 NEXANS will offset losses from the drop in NEXANS's long position.| PROSIEBENSAT1 MEDIADR4/ vs. PENN Entertainment | PROSIEBENSAT1 MEDIADR4/ vs. ON SEMICONDUCTOR | PROSIEBENSAT1 MEDIADR4/ vs. Tower Semiconductor | PROSIEBENSAT1 MEDIADR4/ vs. CNVISION MEDIA |
| NEXANS vs. Hollywood Bowl Group | NEXANS vs. Grupo Carso SAB | NEXANS vs. PROSIEBENSAT1 MEDIADR4 | NEXANS vs. Penn National Gaming |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |