Correlation Between Retail Estates and HORNBACH Baumarkt
Can any of the company-specific risk be diversified away by investing in both Retail Estates and HORNBACH Baumarkt 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 Retail Estates and HORNBACH Baumarkt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and HORNBACH Baumarkt AG, you can compare the effects of market volatilities on Retail Estates and HORNBACH Baumarkt 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 Retail Estates with a short position of HORNBACH Baumarkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and HORNBACH Baumarkt.
Diversification Opportunities for Retail Estates and HORNBACH Baumarkt
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and HORNBACH is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt and Retail Estates 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 Retail Estates NV are associated (or correlated) with HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of Retail Estates i.e., Retail Estates and HORNBACH Baumarkt go up and down completely randomly.
Pair Corralation between Retail Estates and HORNBACH Baumarkt
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the HORNBACH Baumarkt. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.95 times less risky than HORNBACH Baumarkt. The stock trades about -0.16 of its potential returns per unit of risk. The HORNBACH Baumarkt AG is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,000 in HORNBACH Baumarkt AG on September 13, 2024 and sell it today you would earn a total of 50.00 from holding HORNBACH Baumarkt AG or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. HORNBACH Baumarkt AG
Performance |
| Timeline |
| Retail Estates NV |
| HORNBACH Baumarkt |
Retail Estates and HORNBACH Baumarkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and HORNBACH Baumarkt
The main advantage of trading using opposite Retail Estates and HORNBACH Baumarkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, HORNBACH Baumarkt 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 HORNBACH Baumarkt will offset losses from the drop in HORNBACH Baumarkt's long position.| Retail Estates vs. Vicinity Centres | Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings | Retail Estates vs. SIVERS SEMICONDUCTORS AB |
| HORNBACH Baumarkt vs. BURLINGTON STORES | HORNBACH Baumarkt vs. Retail Estates NV | HORNBACH Baumarkt vs. PICKN PAY STORES | HORNBACH Baumarkt vs. Sekisui Chemical Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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