Correlation Between Talanx AG and Contact Energy
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Contact Energy 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 Talanx AG and Contact Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Contact Energy Limited, you can compare the effects of market volatilities on Talanx AG and Contact Energy 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 Talanx AG with a short position of Contact Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Contact Energy.
Diversification Opportunities for Talanx AG and Contact Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talanx and Contact is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Contact Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Energy and Talanx 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 Talanx AG are associated (or correlated) with Contact Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Energy has no effect on the direction of Talanx AG i.e., Talanx AG and Contact Energy go up and down completely randomly.
Pair Corralation between Talanx AG and Contact Energy
Assuming the 90 days horizon Talanx AG is expected to generate 0.85 times more return on investment than Contact Energy. However, Talanx AG is 1.17 times less risky than Contact Energy. It trades about 0.04 of its potential returns per unit of risk. Contact Energy Limited is currently generating about 0.0 per unit of risk. If you would invest 7,430 in Talanx AG on September 1, 2024 and sell it today you would earn a total of 505.00 from holding Talanx AG or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Talanx AG vs. Contact Energy Limited
Performance |
| Timeline |
| Talanx AG |
| Contact Energy |
Talanx AG and Contact Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Contact Energy
The main advantage of trading using opposite Talanx AG and Contact Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Contact Energy 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 Contact Energy will offset losses from the drop in Contact Energy's long position.| Talanx AG vs. Retail Estates NV | Talanx AG vs. COMMERCIAL VEHICLE | Talanx AG vs. Geely Automobile Holdings | Talanx AG vs. Commercial Vehicle Group |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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