Correlation Between VERTIV HOLCL and Talanx AG

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

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

Diversification Opportunities for VERTIV HOLCL and Talanx AG

-0.77

Correlation Coefficient

VERTIV HOLCL  Talanx AG

Pay attention - limited upside

The 3 months correlation between VERTIV and Talanx is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding VERTIV HOLCL A and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and VERTIV HOLCL 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 VERTIV HOLCL A are associated (or correlated) with Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of VERTIV HOLCL i.e., VERTIV HOLCL and Talanx AG go up and down completely randomly.

Pair Corralation between VERTIV HOLCL and Talanx AG

Assuming the 90 days horizon VERTIV HOLCL A is expected to under-perform the Talanx AG. In addition to that, VERTIV HOLCL is 4.22 times more volatile than Talanx AG. It trades about -0.06 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.22 per unit of volatility. If you would invest  8,080  in Talanx AG on December 21, 2024 and sell it today you would earn a total of  1,485  from holding Talanx AG or generate 18.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VERTIV HOLCL A  vs.  Talanx AG

VERTIV HOLCL A

Risk-Adjusted Performance

Very Weak

Over the last 90 days VERTIV HOLCL A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Talanx AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VERTIV HOLCL and Talanx AG

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

The idea behind VERTIV HOLCL A and Talanx 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.