Correlation Between SLR Investment and Varta AG

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Can any of the company-specific risk be diversified away by investing in both SLR Investment and Varta 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 SLR Investment and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Varta AG, you can compare the effects of market volatilities on SLR Investment and Varta 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 SLR Investment with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Varta AG.

Diversification Opportunities for SLR Investment and Varta AG

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between SLR and Varta is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and SLR Investment 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 SLR Investment Corp are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of SLR Investment i.e., SLR Investment and Varta AG go up and down completely randomly.

Pair Corralation between SLR Investment and Varta AG

Assuming the 90 days horizon SLR Investment Corp is expected to generate 0.14 times more return on investment than Varta AG. However, SLR Investment Corp is 6.93 times less risky than Varta AG. It trades about 0.07 of its potential returns per unit of risk. Varta AG is currently generating about -0.01 per unit of risk. If you would invest  1,075  in SLR Investment Corp on September 13, 2024 and sell it today you would earn a total of  511.00  from holding SLR Investment Corp or generate 47.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SLR Investment Corp  vs.  Varta AG

 Performance 
       Timeline  
SLR Investment Corp 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.
Varta AG 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Varta AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

SLR Investment and Varta AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SLR Investment and Varta AG

The main advantage of trading using opposite SLR Investment and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment position performs unexpectedly, Varta 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 Varta AG will offset losses from the drop in Varta AG's long position.
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The idea behind SLR Investment Corp and Varta 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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