Correlation Between RTL Group and Valiant Eagle
Can any of the company-specific risk be diversified away by investing in both RTL Group and Valiant Eagle 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 RTL Group and Valiant Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RTL Group SA and Valiant Eagle, you can compare the effects of market volatilities on RTL Group and Valiant Eagle 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 RTL Group with a short position of Valiant Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL Group and Valiant Eagle.
Diversification Opportunities for RTL Group and Valiant Eagle
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between RTL and Valiant is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and Valiant Eagle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valiant Eagle and RTL Group 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 RTL Group SA are associated (or correlated) with Valiant Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valiant Eagle has no effect on the direction of RTL Group i.e., RTL Group and Valiant Eagle go up and down completely randomly.
Pair Corralation between RTL Group and Valiant Eagle
Assuming the 90 days horizon RTL Group SA is expected to under-perform the Valiant Eagle. But the pink sheet apears to be less risky and, when comparing its historical volatility, RTL Group SA is 101.62 times less risky than Valiant Eagle. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Valiant Eagle is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Valiant Eagle on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Valiant Eagle or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
RTL Group SA vs. Valiant Eagle
Performance |
| Timeline |
| RTL Group SA |
| Valiant Eagle |
RTL Group and Valiant Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RTL Group and Valiant Eagle
The main advantage of trading using opposite RTL Group and Valiant Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTL Group position performs unexpectedly, Valiant Eagle 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 Valiant Eagle will offset losses from the drop in Valiant Eagle's long position.| RTL Group vs. ITV plc | RTL Group vs. ITV PLC ADR | RTL Group vs. iHeartMedia | RTL Group vs. ProSiebenSat1 Media AG |
| Valiant Eagle vs. Seychelle Environmtl | Valiant Eagle vs. Energy and Water | Valiant Eagle vs. One World Universe | Valiant Eagle vs. Vow ASA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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