Correlation Between Rheinmetall and AEON STORES
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and AEON STORES 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 AEON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and AEON STORES, you can compare the effects of market volatilities on Rheinmetall and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and AEON STORES.
Diversification Opportunities for Rheinmetall and AEON STORES
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rheinmetall and AEON is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of Rheinmetall i.e., Rheinmetall and AEON STORES go up and down completely randomly.
Pair Corralation between Rheinmetall and AEON STORES
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.76 times more return on investment than AEON STORES. However, Rheinmetall is 1.76 times more volatile than AEON STORES. It trades about 0.49 of its potential returns per unit of risk. AEON STORES is currently generating about 0.22 per unit of risk. If you would invest 61,820 in Rheinmetall AG on October 28, 2024 and sell it today you would earn a total of 11,220 from holding Rheinmetall AG or generate 18.15% 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. AEON STORES
Performance |
| Timeline |
| Rheinmetall AG |
| AEON STORES |
Rheinmetall and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and AEON STORES
The main advantage of trading using opposite Rheinmetall and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| Rheinmetall vs. AEON STORES | Rheinmetall vs. JIAHUA STORES | Rheinmetall vs. BURLINGTON STORES | Rheinmetall vs. Elmos Semiconductor SE |
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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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