Correlation Between Varta AG and Hannover Rück
Can any of the company-specific risk be diversified away by investing in both Varta AG and Hannover Rück 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 Hannover Rück into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Hannover Rck SE, you can compare the effects of market volatilities on Varta AG and Hannover Rück 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 Hannover Rück. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Hannover Rück.
Diversification Opportunities for Varta AG and Hannover Rück
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Varta and Hannover is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE 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 Hannover Rück. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of Varta AG i.e., Varta AG and Hannover Rück go up and down completely randomly.
Pair Corralation between Varta AG and Hannover Rück
Assuming the 90 days trading horizon Varta AG is expected to generate 13.39 times more return on investment than Hannover Rück. However, Varta AG is 13.39 times more volatile than Hannover Rck SE. It trades about 0.08 of its potential returns per unit of risk. Hannover Rck SE is currently generating about -0.04 per unit of risk. If you would invest 175.00 in Varta AG on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Varta AG or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Varta AG vs. Hannover Rck SE
Performance |
| Timeline |
| Varta AG |
| Hannover Rck SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Varta AG and Hannover Rück Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Hannover Rück
The main advantage of trading using opposite Varta AG and Hannover Rück positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, Hannover Rück 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 Hannover Rück will offset losses from the drop in Hannover Rück's long position.| Varta AG vs. CHINA EDUCATION GROUP | Varta AG vs. IDP EDUCATION LTD | Varta AG vs. TAL Education Group | Varta AG vs. DEVRY EDUCATION GRP |
| Hannover Rück vs. Geely Automobile Holdings | Hannover Rück vs. United Natural Foods | Hannover Rück vs. Performance Food Group | Hannover Rück vs. CN MODERN DAIRY |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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