Correlation Between Rheinmetall and Carmat SA
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Carmat SA 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 Carmat SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Carmat SA, you can compare the effects of market volatilities on Rheinmetall and Carmat SA 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 Carmat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Carmat SA.
Diversification Opportunities for Rheinmetall and Carmat SA
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rheinmetall and Carmat is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA 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 Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of Rheinmetall i.e., Rheinmetall and Carmat SA go up and down completely randomly.
Pair Corralation between Rheinmetall and Carmat SA
Assuming the 90 days horizon Rheinmetall AG is expected to generate 0.44 times more return on investment than Carmat SA. However, Rheinmetall AG is 2.25 times less risky than Carmat SA. It trades about 0.15 of its potential returns per unit of risk. Carmat SA is currently generating about -0.09 per unit of risk. If you would invest 32,799 in Rheinmetall AG on October 20, 2024 and sell it today you would earn a total of 36,301 from holding Rheinmetall AG or generate 110.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Carmat SA
Performance |
| Timeline |
| Rheinmetall AG |
| Carmat SA |
Rheinmetall and Carmat SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Carmat SA
The main advantage of trading using opposite Rheinmetall and Carmat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Carmat SA 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 Carmat SA will offset losses from the drop in Carmat SA's long position.| Rheinmetall vs. Eaton PLC | Rheinmetall vs. ABB | Rheinmetall vs. 3M Company | Rheinmetall vs. Emerson Electric Co |
| Carmat SA vs. Media and Games | Carmat SA vs. DETALION GAMES SA | Carmat SA vs. MTY Food Group | Carmat SA vs. SENECA FOODS A |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |