Correlation Between Rheinmetall and QinetiQ Group
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and QinetiQ Group 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 QinetiQ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG ADR and QinetiQ Group plc, you can compare the effects of market volatilities on Rheinmetall and QinetiQ Group 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 QinetiQ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and QinetiQ Group.
Diversification Opportunities for Rheinmetall and QinetiQ Group
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rheinmetall and QinetiQ is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG ADR and QinetiQ Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QinetiQ Group 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 ADR are associated (or correlated) with QinetiQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QinetiQ Group plc has no effect on the direction of Rheinmetall i.e., Rheinmetall and QinetiQ Group go up and down completely randomly.
Pair Corralation between Rheinmetall and QinetiQ Group
Assuming the 90 days horizon Rheinmetall AG ADR is expected to generate 0.89 times more return on investment than QinetiQ Group. However, Rheinmetall AG ADR is 1.12 times less risky than QinetiQ Group. It trades about 0.12 of its potential returns per unit of risk. QinetiQ Group plc is currently generating about 0.05 per unit of risk. If you would invest 4,073 in Rheinmetall AG ADR on September 2, 2024 and sell it today you would earn a total of 9,061 from holding Rheinmetall AG ADR or generate 222.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.14% |
| Values | Daily Returns |
Rheinmetall AG ADR vs. QinetiQ Group plc
Performance |
| Timeline |
| Rheinmetall AG ADR |
| QinetiQ Group plc |
Rheinmetall and QinetiQ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and QinetiQ Group
The main advantage of trading using opposite Rheinmetall and QinetiQ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, QinetiQ Group 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 QinetiQ Group will offset losses from the drop in QinetiQ Group's long position.| Rheinmetall vs. Firan Technology Group | Rheinmetall vs. 808 Renewable Energy | Rheinmetall vs. Park Electrochemical | Rheinmetall vs. Innovative Solutions and |
| QinetiQ Group vs. Firan Technology Group | QinetiQ Group vs. 808 Renewable Energy | QinetiQ Group vs. Park Electrochemical | QinetiQ Group vs. Innovative Solutions and |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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