Correlation Between Sika AG and IMCD NV
Can any of the company-specific risk be diversified away by investing in both Sika AG and IMCD NV 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 Sika AG and IMCD NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG ADR and IMCD NV, you can compare the effects of market volatilities on Sika AG and IMCD NV 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 Sika AG with a short position of IMCD NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and IMCD NV.
Diversification Opportunities for Sika AG and IMCD NV
Poor diversification
The 3 months correlation between Sika and IMCD is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG ADR and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD NV and Sika AG 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 Sika AG ADR are associated (or correlated) with IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of Sika AG i.e., Sika AG and IMCD NV go up and down completely randomly.
Pair Corralation between Sika AG and IMCD NV
If you would invest 2,362 in Sika AG ADR on November 3, 2024 and sell it today you would earn a total of 177.00 from holding Sika AG ADR or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG ADR vs. IMCD NV
Performance |
| Timeline |
| Sika AG ADR |
| IMCD NV |
Sika AG and IMCD NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and IMCD NV
The main advantage of trading using opposite Sika AG and IMCD NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, IMCD NV 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 IMCD NV will offset losses from the drop in IMCD NV's long position.The idea behind Sika AG ADR and IMCD NV 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.| IMCD NV vs. Air Products and | IMCD NV vs. PPG Industries | IMCD NV vs. Sherwin Williams Co | IMCD NV vs. Ecolab Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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