Correlation Between Varta AG and Bayer Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Varta AG and Bayer Aktiengesellscha 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 Varta AG and Bayer Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on Varta AG and Bayer Aktiengesellscha 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 Varta AG with a short position of Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Bayer Aktiengesellscha.
Diversification Opportunities for Varta AG and Bayer Aktiengesellscha
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Varta and Bayer is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft and Varta 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 Varta AG are associated (or correlated) with Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Varta AG i.e., Varta AG and Bayer Aktiengesellscha go up and down completely randomly.
Pair Corralation between Varta AG and Bayer Aktiengesellscha
Assuming the 90 days trading horizon Varta AG is expected to generate 3.07 times more return on investment than Bayer Aktiengesellscha. However, Varta AG is 3.07 times more volatile than Bayer Aktiengesellschaft. It trades about 0.0 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest 1,622 in Varta AG on August 29, 2024 and sell it today you would lose (1,409) from holding Varta AG or give up 86.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Varta AG vs. Bayer Aktiengesellschaft
Performance |
| Timeline |
| Varta AG |
| Bayer Aktiengesellschaft |
Varta AG and Bayer Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Bayer Aktiengesellscha
The main advantage of trading using opposite Varta AG and Bayer Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, Bayer Aktiengesellscha 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 Bayer Aktiengesellscha will offset losses from the drop in Bayer Aktiengesellscha's long position.| Varta AG vs. HK Electric Investments | Varta AG vs. Gladstone Investment | Varta AG vs. Iridium Communications | Varta AG vs. Spirent Communications plc |
| Bayer Aktiengesellscha vs. Benchmark Electronics | Bayer Aktiengesellscha vs. BYD ELECTRONIC | Bayer Aktiengesellscha vs. Alfa Financial Software | Bayer Aktiengesellscha vs. Electronic Arts |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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