Correlation Between Zumtobel Group and Rexel SA
Can any of the company-specific risk be diversified away by investing in both Zumtobel Group and Rexel 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 Zumtobel Group and Rexel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zumtobel Group AG and Rexel SA, you can compare the effects of market volatilities on Zumtobel Group and Rexel 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 Zumtobel Group with a short position of Rexel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zumtobel Group and Rexel SA.
Diversification Opportunities for Zumtobel Group and Rexel SA
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zumtobel and Rexel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Zumtobel Group AG and Rexel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexel SA and Zumtobel Group 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 Zumtobel Group AG are associated (or correlated) with Rexel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexel SA has no effect on the direction of Zumtobel Group i.e., Zumtobel Group and Rexel SA go up and down completely randomly.
Pair Corralation between Zumtobel Group and Rexel SA
Assuming the 90 days horizon Zumtobel Group AG is expected to under-perform the Rexel SA. But the stock apears to be less risky and, when comparing its historical volatility, Zumtobel Group AG is 1.46 times less risky than Rexel SA. The stock trades about -0.08 of its potential returns per unit of risk. The Rexel SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Rexel SA on September 5, 2024 and sell it today you would lose (310.00) from holding Rexel SA or give up 11.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zumtobel Group AG vs. Rexel SA
Performance |
| Timeline |
| Zumtobel Group AG |
| Rexel SA |
Zumtobel Group and Rexel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zumtobel Group and Rexel SA
The main advantage of trading using opposite Zumtobel Group and Rexel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zumtobel Group position performs unexpectedly, Rexel 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 Rexel SA will offset losses from the drop in Rexel SA's long position.| Zumtobel Group vs. Rexel SA | Zumtobel Group vs. Avnet Inc | Zumtobel Group vs. NKT AS | Zumtobel Group vs. Solar AS |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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