Correlation Between Talanx AG and AECOM
Can any of the company-specific risk be diversified away by investing in both Talanx AG and AECOM 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 AECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and AECOM, you can compare the effects of market volatilities on Talanx AG and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and AECOM.
Diversification Opportunities for Talanx AG and AECOM
Significant diversification
The 3 months correlation between Talanx and AECOM is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of Talanx AG i.e., Talanx AG and AECOM go up and down completely randomly.
Pair Corralation between Talanx AG and AECOM
Assuming the 90 days horizon Talanx AG is expected to generate 1.03 times less return on investment than AECOM. But when comparing it to its historical volatility, Talanx AG is 2.2 times less risky than AECOM. It trades about 0.41 of its potential returns per unit of risk. AECOM is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9,800 in AECOM on September 1, 2024 and sell it today you would earn a total of 1,200 from holding AECOM or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Talanx AG vs. AECOM
Performance |
| Timeline |
| Talanx AG |
| AECOM |
Talanx AG and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and AECOM
The main advantage of trading using opposite Talanx AG and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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