Correlation Between Metro AG and Metro AG

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

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

Diversification Opportunities for Metro AG and Metro AG

0.37

Correlation Coefficient

Metro AG  Metro AG

Weak diversification

The 3 months correlation between Metro and Metro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Metro 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 Metro AG are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Metro AG i.e., Metro AG and Metro AG go up and down completely randomly.

Pair Corralation between Metro AG and Metro AG

Assuming the 90 days trading horizon Metro AG is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, Metro AG is 2.75 times less risky than Metro AG. The stock trades about -0.14 of its potential returns per unit of risk. The Metro AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Metro AG on October 8, 2024 and sell it today you would lose (15.00) from holding Metro AG or give up 2.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.33%
Values	Daily Returns

Metro AG  vs.  Metro AG

Metro AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metro AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Metro AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metro AG and Metro AG

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

The idea behind Metro AG and Metro 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..