Correlation Between Varta AG and Regal Hotels
Can any of the company-specific risk be diversified away by investing in both Varta AG and Regal Hotels 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 Regal Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Regal Hotels International, you can compare the effects of market volatilities on Varta AG and Regal Hotels 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 Regal Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Regal Hotels.
Diversification Opportunities for Varta AG and Regal Hotels
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Varta and Regal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Regal Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Hotels Interna 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 Regal Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Hotels Interna has no effect on the direction of Varta AG i.e., Varta AG and Regal Hotels go up and down completely randomly.
Pair Corralation between Varta AG and Regal Hotels
Assuming the 90 days trading horizon Varta AG is expected to under-perform the Regal Hotels. In addition to that, Varta AG is 3.84 times more volatile than Regal Hotels International. It trades about -0.27 of its total potential returns per unit of risk. Regal Hotels International is currently generating about 0.1 per unit of volatility. If you would invest 28.00 in Regal Hotels International on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Regal Hotels International or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varta AG vs. Regal Hotels International
Performance |
| Timeline |
| Varta AG |
| Regal Hotels Interna |
Varta AG and Regal Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Regal Hotels
The main advantage of trading using opposite Varta AG and Regal Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, Regal Hotels 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 Regal Hotels will offset losses from the drop in Regal Hotels' 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 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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