Correlation Between Shell PLC and OMV AG

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Can any of the company-specific risk be diversified away by investing in both Shell PLC and OMV AG 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 Shell PLC and OMV AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell PLC ADR and OMV AG PK, you can compare the effects of market volatilities on Shell PLC and OMV AG 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 Shell PLC with a short position of OMV AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell PLC and OMV AG.

Diversification Opportunities for Shell PLC and OMV AG

ShellOMVDiversified AwayShellOMVDiversified Away100%
0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shell and OMV is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shell PLC ADR and OMV AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV AG PK and Shell PLC 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 Shell PLC ADR are associated (or correlated) with OMV AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV AG PK has no effect on the direction of Shell PLC i.e., Shell PLC and OMV AG go up and down completely randomly.

Pair Corralation between Shell PLC and OMV AG

Given the investment horizon of 90 days Shell PLC is expected to generate 1.59 times less return on investment than OMV AG. But when comparing it to its historical volatility, Shell PLC ADR is 1.32 times less risky than OMV AG. It trades about 0.15 of its potential returns per unit of risk. OMV AG PK is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,018  in OMV AG PK on November 27, 2024 and sell it today you would earn a total of  58.00  from holding OMV AG PK or generate 5.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Shell PLC ADR  vs.  OMV AG PK

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-2024
JavaScript chart by amCharts 3.21.15SHEL OMVKY
       Timeline  
Shell PLC ADR 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Shell PLC is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb606162636465666768
OMV AG PK 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in OMV AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, OMV AG may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9.49.69.81010.210.410.610.811

Shell PLC and OMV AG Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.65-2.73-1.82-0.90.01570.921.862.83.74 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15SHEL OMVKY
       Returns  

Pair Trading with Shell PLC and OMV AG

The main advantage of trading using opposite Shell PLC and OMV AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell PLC position performs unexpectedly, OMV AG 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 OMV AG will offset losses from the drop in OMV AG's long position.
The idea behind Shell PLC ADR and OMV AG PK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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