Correlation Between Rheinmetall and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Deutsche Post 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 Deutsche Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Deutsche Post AG, you can compare the effects of market volatilities on Rheinmetall and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Deutsche Post.
Diversification Opportunities for Rheinmetall and Deutsche Post
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rheinmetall and Deutsche is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Rheinmetall i.e., Rheinmetall and Deutsche Post go up and down completely randomly.
Pair Corralation between Rheinmetall and Deutsche Post
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 1.0 times more return on investment than Deutsche Post. However, Rheinmetall is 1.0 times more volatile than Deutsche Post AG. It trades about 0.58 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.14 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Deutsche Post AG
Performance |
| Timeline |
| Rheinmetall AG |
| Deutsche Post AG |
Rheinmetall and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Deutsche Post
The main advantage of trading using opposite Rheinmetall and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.| Rheinmetall vs. Entravision Communications | Rheinmetall vs. Ares Management Corp | Rheinmetall vs. Charter Communications | Rheinmetall vs. Highlight Communications AG |
| Deutsche Post vs. ZTO Express | Deutsche Post vs. Superior Plus Corp | Deutsche Post vs. Origin Agritech | Deutsche Post vs. Identiv |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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