Correlation Between VERBUND AG and BAWAG Group
Can any of the company-specific risk be diversified away by investing in both VERBUND AG and BAWAG Group 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 VERBUND AG and BAWAG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VERBUND AG and BAWAG Group AG, you can compare the effects of market volatilities on VERBUND AG and BAWAG Group 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 VERBUND AG with a short position of BAWAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERBUND AG and BAWAG Group.
Diversification Opportunities for VERBUND AG and BAWAG Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VERBUND and BAWAG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding VERBUND AG and BAWAG Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAWAG Group AG and VERBUND 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 VERBUND AG are associated (or correlated) with BAWAG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAWAG Group AG has no effect on the direction of VERBUND AG i.e., VERBUND AG and BAWAG Group go up and down completely randomly.
Pair Corralation between VERBUND AG and BAWAG Group
Assuming the 90 days trading horizon VERBUND AG is expected to under-perform the BAWAG Group. In addition to that, VERBUND AG is 1.53 times more volatile than BAWAG Group AG. It trades about -0.23 of its total potential returns per unit of risk. BAWAG Group AG is currently generating about 0.28 per unit of volatility. If you would invest 7,415 in BAWAG Group AG on September 18, 2024 and sell it today you would earn a total of 505.00 from holding BAWAG Group AG or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VERBUND AG vs. BAWAG Group AG
Performance |
| Timeline |
| VERBUND AG |
| BAWAG Group AG |
VERBUND AG and BAWAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VERBUND AG and BAWAG Group
The main advantage of trading using opposite VERBUND AG and BAWAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERBUND AG position performs unexpectedly, BAWAG Group 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 BAWAG Group will offset losses from the drop in BAWAG Group's long position.| VERBUND AG vs. OMV Aktiengesellschaft | VERBUND AG vs. Voestalpine AG | VERBUND AG vs. Wienerberger AG | VERBUND AG vs. EVN AG |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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