Correlation Between Rheinmetall and Saputo
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Saputo 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 Saputo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Saputo Inc, you can compare the effects of market volatilities on Rheinmetall and Saputo 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 Saputo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Saputo.
Diversification Opportunities for Rheinmetall and Saputo
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rheinmetall and Saputo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc 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 Saputo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of Rheinmetall i.e., Rheinmetall and Saputo go up and down completely randomly.
Pair Corralation between Rheinmetall and Saputo
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 2.88 times more return on investment than Saputo. However, Rheinmetall is 2.88 times more volatile than Saputo Inc. It trades about 0.29 of its potential returns per unit of risk. Saputo Inc is currently generating about 0.23 per unit of risk. If you would invest 72,280 in Rheinmetall AG on November 28, 2024 and sell it today you would earn a total of 23,720 from holding Rheinmetall AG or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Saputo Inc
Performance |
| Timeline |
| Rheinmetall AG |
| Saputo Inc |
Rheinmetall and Saputo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Saputo
The main advantage of trading using opposite Rheinmetall and Saputo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Saputo 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 Saputo will offset losses from the drop in Saputo's long position.| Rheinmetall vs. Scottish Mortgage Investment | Rheinmetall vs. Yuexiu Transport Infrastructure | Rheinmetall vs. Air Transport Services | Rheinmetall vs. Guangdong Investment Limited |
| Saputo vs. Tradeweb Markets | Saputo vs. CANON MARKETING JP | Saputo vs. Allegheny Technologies Incorporated | Saputo vs. Easy Software AG |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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