Correlation Between Rheinmetall and CSL
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and CSL 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 CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and CSL LTD SPONADR, you can compare the effects of market volatilities on Rheinmetall and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and CSL.
Diversification Opportunities for Rheinmetall and CSL
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rheinmetall and CSL is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of Rheinmetall i.e., Rheinmetall and CSL go up and down completely randomly.
Pair Corralation between Rheinmetall and CSL
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.51 times more return on investment than CSL. However, Rheinmetall is 1.51 times more volatile than CSL LTD SPONADR. It trades about 0.63 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about -0.05 per unit of risk. If you would invest 60,460 in Rheinmetall AG on November 2, 2024 and sell it today you would earn a total of 14,580 from holding Rheinmetall AG or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rheinmetall AG vs. CSL LTD SPONADR
Performance |
| Timeline |
| Rheinmetall AG |
| CSL LTD SPONADR |
Rheinmetall and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and CSL
The main advantage of trading using opposite Rheinmetall and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Rheinmetall vs. Honeywell International | Rheinmetall vs. Illinois Tool Works | Rheinmetall vs. Eaton PLC | Rheinmetall vs. Trane Technologies plc |
| CSL vs. AGNC INVESTMENT | CSL vs. Guangdong Investment Limited | CSL vs. VULCAN MATERIALS | CSL vs. Martin Marietta Materials |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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