Correlation Between PUMA SE and Adidas AG
Can any of the company-specific risk be diversified away by investing in both PUMA SE and Adidas AG 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 PUMA SE and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PUMA SE UNSPADR and adidas AG, you can compare the effects of market volatilities on PUMA SE and Adidas AG 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 PUMA SE with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUMA SE and Adidas AG.
Diversification Opportunities for PUMA SE and Adidas AG
Excellent diversification
The 3 months correlation between PUMA and Adidas is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PUMA SE UNSPADR and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG and PUMA SE 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 PUMA SE UNSPADR are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of PUMA SE i.e., PUMA SE and Adidas AG go up and down completely randomly.
Pair Corralation between PUMA SE and Adidas AG
Assuming the 90 days trading horizon PUMA SE is expected to generate 2.03 times less return on investment than Adidas AG. In addition to that, PUMA SE is 1.91 times more volatile than adidas AG. It trades about 0.02 of its total potential returns per unit of risk. adidas AG is currently generating about 0.07 per unit of volatility. If you would invest 12,118 in adidas AG on August 24, 2024 and sell it today you would earn a total of 9,322 from holding adidas AG or generate 76.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PUMA SE UNSPADR vs. adidas AG
Performance |
| Timeline |
| PUMA SE UNSPADR |
| adidas AG |
PUMA SE and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PUMA SE and Adidas AG
The main advantage of trading using opposite PUMA SE and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUMA SE position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| PUMA SE vs. Kering SA | PUMA SE vs. Deckers Outdoor | PUMA SE vs. Superior Plus Corp | PUMA SE vs. Origin Agritech |
| Adidas AG vs. Kering SA | Adidas AG vs. Deckers Outdoor | Adidas AG vs. Superior Plus Corp | Adidas AG vs. Origin Agritech |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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