Correlation Between WESTERN PER and UmweltBank

Can any of the company-specific risk be diversified away by investing in both WESTERN PER and UmweltBank 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 WESTERN PER and UmweltBank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESTERN PER and UmweltBank AG, you can compare the effects of market volatilities on WESTERN PER and UmweltBank 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 WESTERN PER with a short position of UmweltBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN PER and UmweltBank.

Diversification Opportunities for WESTERN PER and UmweltBank

-0.02

Correlation Coefficient

WESTERN PER  UmweltBank

Good diversification

The 3 months correlation between WESTERN and UmweltBank is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN PER and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG and WESTERN PER 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 WESTERN PER are associated (or correlated) with UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of WESTERN PER i.e., WESTERN PER and UmweltBank go up and down completely randomly.

Pair Corralation between WESTERN PER and UmweltBank

Assuming the 90 days trading horizon WESTERN PER is expected to under-perform the UmweltBank. In addition to that, WESTERN PER is 1.56 times more volatile than UmweltBank AG. It trades about -0.02 of its total potential returns per unit of risk. UmweltBank AG is currently generating about 0.04 per unit of volatility. If you would invest  588.00  in UmweltBank AG on October 26, 2024 and sell it today you would earn a total of  22.00  from holding UmweltBank AG or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

WESTERN PER  vs.  UmweltBank AG

WESTERN PER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN PER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WESTERN PER is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

UmweltBank AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UmweltBank AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UmweltBank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WESTERN PER and UmweltBank

The main advantage of trading using opposite WESTERN PER and UmweltBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN PER position performs unexpectedly, UmweltBank 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 UmweltBank will offset losses from the drop in UmweltBank's long position.

The idea behind WESTERN PER and UmweltBank 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.