Correlation Between Wolford Aktiengesellscha and VERBUND AG
Can any of the company-specific risk be diversified away by investing in both Wolford Aktiengesellscha and VERBUND AG 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 VERBUND AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolford Aktiengesellschaft and VERBUND AG, you can compare the effects of market volatilities on Wolford Aktiengesellscha and VERBUND AG 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 VERBUND AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolford Aktiengesellscha and VERBUND AG.
Diversification Opportunities for Wolford Aktiengesellscha and VERBUND AG
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wolford and VERBUND is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wolford Aktiengesellschaft and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND 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 VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of Wolford Aktiengesellscha i.e., Wolford Aktiengesellscha and VERBUND AG go up and down completely randomly.
Pair Corralation between Wolford Aktiengesellscha and VERBUND AG
Assuming the 90 days trading horizon Wolford Aktiengesellschaft is expected to generate 5.36 times more return on investment than VERBUND AG. However, Wolford Aktiengesellscha is 5.36 times more volatile than VERBUND AG. It trades about 0.34 of its potential returns per unit of risk. VERBUND AG is currently generating about -0.23 per unit of risk. If you would invest 250.00 in Wolford Aktiengesellschaft on September 18, 2024 and sell it today you would earn a total of 194.00 from holding Wolford Aktiengesellschaft or generate 77.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wolford Aktiengesellschaft vs. VERBUND AG
Performance |
| Timeline |
| Wolford Aktiengesellscha |
| VERBUND AG |
Wolford Aktiengesellscha and VERBUND AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolford Aktiengesellscha and VERBUND AG
The main advantage of trading using opposite Wolford Aktiengesellscha and VERBUND AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolford Aktiengesellscha position performs unexpectedly, VERBUND AG 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 VERBUND AG will offset losses from the drop in VERBUND AG's long position.The idea behind Wolford Aktiengesellschaft and VERBUND 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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