Correlation Between Wolford Aktiengesellscha and BAWAG Group
Can any of the company-specific risk be diversified away by investing in both Wolford Aktiengesellscha 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 Wolford Aktiengesellscha and BAWAG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolford Aktiengesellschaft and BAWAG Group AG, you can compare the effects of market volatilities on Wolford Aktiengesellscha 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 Wolford Aktiengesellscha with a short position of BAWAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolford Aktiengesellscha and BAWAG Group.
Diversification Opportunities for Wolford Aktiengesellscha and BAWAG Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wolford and BAWAG is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wolford Aktiengesellschaft 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 Wolford Aktiengesellscha 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 Wolford Aktiengesellschaft 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 Wolford Aktiengesellscha i.e., Wolford Aktiengesellscha and BAWAG Group go up and down completely randomly.
Pair Corralation between Wolford Aktiengesellscha and BAWAG Group
Assuming the 90 days trading horizon Wolford Aktiengesellschaft is expected to under-perform the BAWAG Group. But the stock apears to be less risky and, when comparing its historical volatility, Wolford Aktiengesellschaft is 1.12 times less risky than BAWAG Group. The stock trades about -0.16 of its potential returns per unit of risk. The BAWAG Group AG is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 8,500 in BAWAG Group AG on December 6, 2024 and sell it today you would earn a total of 1,650 from holding BAWAG Group AG or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wolford Aktiengesellschaft vs. BAWAG Group AG
Performance |
| Timeline |
| Wolford Aktiengesellscha |
| BAWAG Group AG |
Wolford Aktiengesellscha and BAWAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolford Aktiengesellscha and BAWAG Group
The main advantage of trading using opposite Wolford Aktiengesellscha and BAWAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolford Aktiengesellscha 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.The idea behind Wolford Aktiengesellschaft and BAWAG Group AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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