Correlation Between Rheinmetall and Strer SE
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Strer SE 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 Strer SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Strer SE Co, you can compare the effects of market volatilities on Rheinmetall and Strer SE 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 Strer SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Strer SE.
Diversification Opportunities for Rheinmetall and Strer SE
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rheinmetall and Strer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Strer SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strer SE 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 Strer SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strer SE has no effect on the direction of Rheinmetall i.e., Rheinmetall and Strer SE go up and down completely randomly.
Pair Corralation between Rheinmetall and Strer SE
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 2.2 times more return on investment than Strer SE. However, Rheinmetall is 2.2 times more volatile than Strer SE Co. It trades about 0.29 of its potential returns per unit of risk. Strer SE Co is currently generating about -0.15 per unit of risk. If you would invest 73,240 in Rheinmetall AG on November 29, 2024 and sell it today you would earn a total of 23,360 from holding Rheinmetall AG or generate 31.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rheinmetall AG vs. Strer SE Co
Performance |
| Timeline |
| Rheinmetall AG |
| Strer SE |
Rheinmetall and Strer SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Strer SE
The main advantage of trading using opposite Rheinmetall and Strer SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Strer SE 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 Strer SE will offset losses from the drop in Strer SE's long position.| Rheinmetall vs. Scottish Mortgage Investment | Rheinmetall vs. Yuexiu Transport Infrastructure | Rheinmetall vs. Air Transport Services | Rheinmetall vs. Guangdong Investment Limited |
| Strer SE vs. GAMES BOX SA | Strer SE vs. Suntory Beverage Food | Strer SE vs. MOLSON RS BEVERAGE | Strer SE vs. China Resources Beer |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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