Correlation Between Aumann AG and Generac Holdings

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

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

Diversification Opportunities for Aumann AG and Generac Holdings

-0.66

Correlation Coefficient

Aumann AG  Generac Holdings

Excellent diversification

The 3 months correlation between Aumann and Generac is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings and Aumann 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 Aumann AG are associated (or correlated) with Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Aumann AG i.e., Aumann AG and Generac Holdings go up and down completely randomly.

Pair Corralation between Aumann AG and Generac Holdings

If you would invest  17,074  in Generac Holdings on September 3, 2024 and sell it today you would earn a total of  1,746  from holding Generac Holdings or generate 10.23% return on investment over 90 days.

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

Aumann AG  vs.  Generac Holdings

Aumann AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Generac Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generac Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Generac Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aumann AG and Generac Holdings

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

The idea behind Aumann AG and Generac Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.