Correlation Between Rheinmetall and Logista
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Logista 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 Rheinmetall and Logista into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Logista, you can compare the effects of market volatilities on Rheinmetall and Logista 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 Rheinmetall with a short position of Logista. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Logista.
Diversification Opportunities for Rheinmetall and Logista
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rheinmetall and Logista is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Logista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logista and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Logista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logista has no effect on the direction of Rheinmetall i.e., Rheinmetall and Logista go up and down completely randomly.
Pair Corralation between Rheinmetall and Logista
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 2.46 times more return on investment than Logista. However, Rheinmetall is 2.46 times more volatile than Logista. It trades about 0.58 of its potential returns per unit of risk. Logista is currently generating about 0.41 per unit of risk. If you would invest 47,440 in Rheinmetall AG on September 1, 2024 and sell it today you would earn a total of 14,880 from holding Rheinmetall AG or generate 31.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.65% |
Values | Daily Returns |
Rheinmetall AG vs. Logista
Performance |
Timeline |
Rheinmetall AG |
Logista |
Rheinmetall and Logista Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rheinmetall and Logista
The main advantage of trading using opposite Rheinmetall and Logista positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Logista 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 Logista will offset losses from the drop in Logista's long position.Rheinmetall vs. Entravision Communications | Rheinmetall vs. Ares Management Corp | Rheinmetall vs. Charter Communications | Rheinmetall vs. Highlight Communications AG |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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