Correlation Between VONOVIA SE and Swire Properties
Can any of the company-specific risk be diversified away by investing in both VONOVIA SE and Swire Properties 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 VONOVIA SE and Swire Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VONOVIA SE ADR and Swire Properties Limited, you can compare the effects of market volatilities on VONOVIA SE and Swire Properties 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 VONOVIA SE with a short position of Swire Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of VONOVIA SE and Swire Properties.
Diversification Opportunities for VONOVIA SE and Swire Properties
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VONOVIA and Swire is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding VONOVIA SE ADR and Swire Properties Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Properties and VONOVIA SE 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 VONOVIA SE ADR are associated (or correlated) with Swire Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Properties has no effect on the direction of VONOVIA SE i.e., VONOVIA SE and Swire Properties go up and down completely randomly.
Pair Corralation between VONOVIA SE and Swire Properties
Assuming the 90 days trading horizon VONOVIA SE ADR is expected to generate 1.61 times more return on investment than Swire Properties. However, VONOVIA SE is 1.61 times more volatile than Swire Properties Limited. It trades about 0.05 of its potential returns per unit of risk. Swire Properties Limited is currently generating about 0.02 per unit of risk. If you would invest 1,510 in VONOVIA SE ADR on August 31, 2024 and sell it today you would earn a total of 30.00 from holding VONOVIA SE ADR or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VONOVIA SE ADR vs. Swire Properties Limited
Performance |
| Timeline |
| VONOVIA SE ADR |
| Swire Properties |
VONOVIA SE and Swire Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VONOVIA SE and Swire Properties
The main advantage of trading using opposite VONOVIA SE and Swire Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VONOVIA SE position performs unexpectedly, Swire Properties 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 Swire Properties will offset losses from the drop in Swire Properties' long position.| VONOVIA SE vs. CBRE Group Class | VONOVIA SE vs. Wharf Real Estate | VONOVIA SE vs. Superior Plus Corp | VONOVIA SE vs. NMI Holdings |
| Swire Properties vs. HOCHSCHILD MINING | Swire Properties vs. Penn National Gaming | Swire Properties vs. ARROW ELECTRONICS | Swire Properties vs. UMC Electronics Co |
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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