Correlation Between United States and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both United States and Rheinmetall 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 United States and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Rheinmetall AG, you can compare the effects of market volatilities on United States and Rheinmetall 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 United States with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Rheinmetall.
Diversification Opportunities for United States and Rheinmetall
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Rheinmetall is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and United States 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 United States Steel are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of United States i.e., United States and Rheinmetall go up and down completely randomly.
Pair Corralation between United States and Rheinmetall
Assuming the 90 days trading horizon United States is expected to generate 3.3 times less return on investment than Rheinmetall. In addition to that, United States is 1.38 times more volatile than Rheinmetall AG. It trades about 0.03 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.15 per unit of volatility. If you would invest 24,607 in Rheinmetall AG on October 16, 2024 and sell it today you would earn a total of 40,653 from holding Rheinmetall AG or generate 165.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Rheinmetall AG
Performance |
| Timeline |
| United States Steel |
| Rheinmetall AG |
United States and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Rheinmetall
The main advantage of trading using opposite United States and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| United States vs. Harmony Gold Mining | United States vs. Endeavour Mining PLC | United States vs. Tencent Music Entertainment | United States vs. MINCO SILVER |
| Rheinmetall vs. ANTA SPORTS PRODUCT | Rheinmetall vs. RELIANCE STEEL AL | Rheinmetall vs. United States Steel | Rheinmetall vs. TOWNSQUARE MEDIA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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