Correlation Between Thyssenkrupp and AZZ Incorporated
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp and AZZ Incorporated 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 Thyssenkrupp and AZZ Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thyssenkrupp AG ADR and AZZ Incorporated, you can compare the effects of market volatilities on Thyssenkrupp and AZZ Incorporated 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 Thyssenkrupp with a short position of AZZ Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and AZZ Incorporated.
Diversification Opportunities for Thyssenkrupp and AZZ Incorporated
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thyssenkrupp and AZZ is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ADR and AZZ Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AZZ Incorporated and Thyssenkrupp 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 Thyssenkrupp AG ADR are associated (or correlated) with AZZ Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AZZ Incorporated has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and AZZ Incorporated go up and down completely randomly.
Pair Corralation between Thyssenkrupp and AZZ Incorporated
Assuming the 90 days horizon Thyssenkrupp is expected to generate 1.06 times less return on investment than AZZ Incorporated. In addition to that, Thyssenkrupp is 1.68 times more volatile than AZZ Incorporated. It trades about 0.2 of its total potential returns per unit of risk. AZZ Incorporated is currently generating about 0.36 per unit of volatility. If you would invest 7,618 in AZZ Incorporated on September 1, 2024 and sell it today you would earn a total of 1,696 from holding AZZ Incorporated or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Thyssenkrupp AG ADR vs. AZZ Incorporated
Performance |
| Timeline |
| Thyssenkrupp AG ADR |
| AZZ Incorporated |
Thyssenkrupp and AZZ Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and AZZ Incorporated
The main advantage of trading using opposite Thyssenkrupp and AZZ Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp position performs unexpectedly, AZZ Incorporated 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 AZZ Incorporated will offset losses from the drop in AZZ Incorporated's long position.| Thyssenkrupp vs. Mueller Industries | Thyssenkrupp vs. ESAB Corp | Thyssenkrupp vs. Worthington Industries | Thyssenkrupp vs. Allegheny Technologies Incorporated |
| AZZ Incorporated vs. Maximus | AZZ Incorporated vs. ABM Industries Incorporated | AZZ Incorporated vs. CBIZ Inc | AZZ Incorporated vs. Cass Information Systems |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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