Correlation Between VirTra and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both VirTra and Rheinmetall 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 VirTra and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VirTra Inc and Rheinmetall AG ADR, you can compare the effects of market volatilities on VirTra and Rheinmetall 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 VirTra with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirTra and Rheinmetall.
Diversification Opportunities for VirTra and Rheinmetall
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VirTra and Rheinmetall is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and Rheinmetall AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG ADR and VirTra 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 VirTra Inc are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG ADR has no effect on the direction of VirTra i.e., VirTra and Rheinmetall go up and down completely randomly.
Pair Corralation between VirTra and Rheinmetall
Given the investment horizon of 90 days VirTra is expected to generate 2.03 times less return on investment than Rheinmetall. In addition to that, VirTra is 2.09 times more volatile than Rheinmetall AG ADR. It trades about 0.04 of its total potential returns per unit of risk. Rheinmetall AG ADR is currently generating about 0.15 per unit of volatility. If you would invest 5,018 in Rheinmetall AG ADR on December 4, 2024 and sell it today you would earn a total of 19,898 from holding Rheinmetall AG ADR or generate 396.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
VirTra Inc vs. Rheinmetall AG ADR
Performance |
| Timeline |
| VirTra Inc |
| Rheinmetall AG ADR |
VirTra and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VirTra and Rheinmetall
The main advantage of trading using opposite VirTra and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirTra position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
| Rheinmetall vs. Hensoldt AG | Rheinmetall vs. Heico | Rheinmetall vs. AeroVironment | Rheinmetall vs. Transdigm Group Incorporated |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |