Correlation Between Adidas AG and Birkenstock Holding
Can any of the company-specific risk be diversified away by investing in both Adidas AG and Birkenstock Holding 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 Adidas AG and Birkenstock Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG and Birkenstock Holding plc, you can compare the effects of market volatilities on Adidas AG and Birkenstock Holding 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 Adidas AG with a short position of Birkenstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and Birkenstock Holding.
Diversification Opportunities for Adidas AG and Birkenstock Holding
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Adidas and Birkenstock is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG and Birkenstock Holding plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birkenstock Holding plc and Adidas AG 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 Adidas AG are associated (or correlated) with Birkenstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birkenstock Holding plc has no effect on the direction of Adidas AG i.e., Adidas AG and Birkenstock Holding go up and down completely randomly.
Pair Corralation between Adidas AG and Birkenstock Holding
Assuming the 90 days horizon Adidas AG is expected to generate 1.16 times more return on investment than Birkenstock Holding. However, Adidas AG is 1.16 times more volatile than Birkenstock Holding plc. It trades about -0.04 of its potential returns per unit of risk. Birkenstock Holding plc is currently generating about -0.54 per unit of risk. If you would invest 26,440 in Adidas AG on December 7, 2024 and sell it today you would lose (597.00) from holding Adidas AG or give up 2.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Adidas AG vs. Birkenstock Holding plc
Performance |
Timeline |
Adidas AG |
Birkenstock Holding plc |
Adidas AG and Birkenstock Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adidas AG and Birkenstock Holding
The main advantage of trading using opposite Adidas AG and Birkenstock Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG position performs unexpectedly, Birkenstock Holding 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 Birkenstock Holding will offset losses from the drop in Birkenstock Holding's long position.Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Adidas AG ADR |
Birkenstock Holding vs. National Beverage Corp | Birkenstock Holding vs. Diageo PLC ADR | Birkenstock Holding vs. Compania Cervecerias Unidas | Birkenstock Holding vs. Scandinavian Tobacco Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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