Correlation Between Rheinmetall and Fresnillo Plc
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Fresnillo Plc 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 Fresnillo Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Fresnillo plc, you can compare the effects of market volatilities on Rheinmetall and Fresnillo Plc 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 Fresnillo Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Fresnillo Plc.
Diversification Opportunities for Rheinmetall and Fresnillo Plc
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rheinmetall and Fresnillo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Fresnillo plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo plc 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 Fresnillo Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo plc has no effect on the direction of Rheinmetall i.e., Rheinmetall and Fresnillo Plc go up and down completely randomly.
Pair Corralation between Rheinmetall and Fresnillo Plc
Assuming the 90 days horizon Rheinmetall AG is expected to generate 0.89 times more return on investment than Fresnillo Plc. However, Rheinmetall AG is 1.13 times less risky than Fresnillo Plc. It trades about 0.63 of its potential returns per unit of risk. Fresnillo plc is currently generating about 0.09 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rheinmetall AG vs. Fresnillo plc
Performance |
| Timeline |
| Rheinmetall AG |
| Fresnillo plc |
Rheinmetall and Fresnillo Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Fresnillo Plc
The main advantage of trading using opposite Rheinmetall and Fresnillo Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Fresnillo Plc 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 Fresnillo Plc will offset losses from the drop in Fresnillo Plc's long position.| Rheinmetall vs. Honeywell International | Rheinmetall vs. Illinois Tool Works | Rheinmetall vs. Eaton PLC | Rheinmetall vs. Trane Technologies plc |
| Fresnillo Plc vs. Superior Plus Corp | Fresnillo Plc vs. Origin Agritech | Fresnillo Plc vs. Identiv | Fresnillo Plc vs. INTUITIVE SURGICAL |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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