Correlation Between Varta AG and HUT 8
Can any of the company-specific risk be diversified away by investing in both Varta AG and HUT 8 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 HUT 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and HUT 8 P, you can compare the effects of market volatilities on Varta AG and HUT 8 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 HUT 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and HUT 8.
Diversification Opportunities for Varta AG and HUT 8
Modest diversification
The 3 months correlation between Varta and HUT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and HUT 8 P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUT 8 P 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 HUT 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUT 8 P has no effect on the direction of Varta AG i.e., Varta AG and HUT 8 go up and down completely randomly.
Pair Corralation between Varta AG and HUT 8
Assuming the 90 days trading horizon Varta AG is expected to under-perform the HUT 8. But the stock apears to be less risky and, when comparing its historical volatility, Varta AG is 1.11 times less risky than HUT 8. The stock trades about -0.27 of its potential returns per unit of risk. The HUT 8 P is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,580 in HUT 8 P on August 28, 2024 and sell it today you would earn a total of 810.00 from holding HUT 8 P or generate 51.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varta AG vs. HUT 8 P
Performance |
| Timeline |
| Varta AG |
| HUT 8 P |
Varta AG and HUT 8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and HUT 8
The main advantage of trading using opposite Varta AG and HUT 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, HUT 8 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 HUT 8 will offset losses from the drop in HUT 8's long position.| Varta AG vs. ECHO INVESTMENT ZY | Varta AG vs. PennyMac Mortgage Investment | Varta AG vs. GALENA MINING LTD | Varta AG vs. MGIC INVESTMENT |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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