Correlation Between PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES 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 WOLFDEN RES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES P, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES 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 WOLFDEN RES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and WOLFDEN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLFDEN RES P 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 WOLFDEN RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLFDEN RES P has no effect on the direction of PROSIEBENSAT1 MEDIADR4 i.e., PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 0.23 times more return on investment than WOLFDEN RES. However, PROSIEBENSAT1 MEDIADR4 is 4.28 times less risky than WOLFDEN RES. It trades about 0.13 of its potential returns per unit of risk. WOLFDEN RES P is currently generating about -0.01 per unit of risk. If you would invest 122.00 in PROSIEBENSAT1 MEDIADR4 on October 29, 2024 and sell it today you would earn a total of 7.00 from holding PROSIEBENSAT1 MEDIADR4 or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. WOLFDEN RES P
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4 |
| WOLFDEN RES P |
PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4 and WOLFDEN RES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4 position performs unexpectedly, WOLFDEN RES 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 WOLFDEN RES will offset losses from the drop in WOLFDEN RES's long position.| PROSIEBENSAT1 MEDIADR4 vs. Heidelberg Materials AG | PROSIEBENSAT1 MEDIADR4 vs. AUST AGRICULTURAL | PROSIEBENSAT1 MEDIADR4 vs. North American Construction | PROSIEBENSAT1 MEDIADR4 vs. GOODYEAR T RUBBER |
| WOLFDEN RES vs. ETFS Coffee ETC | WOLFDEN RES vs. ZINC MEDIA GR | WOLFDEN RES vs. Tencent Music Entertainment | WOLFDEN RES vs. PROSIEBENSAT1 MEDIADR4 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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