Correlation Between Brockhaus Capital and Metro AG

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

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

Diversification Opportunities for Brockhaus Capital and Metro AG

-0.24

Correlation Coefficient

Brockhaus Capital  Metro AG

Very good diversification

The 3 months correlation between Brockhaus and Metro is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Metro AG go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Metro AG

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, Brockhaus Capital Management is 1.3 times less risky than Metro AG. The stock trades about -0.06 of its potential returns per unit of risk. The Metro AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Metro AG on December 22, 2024 and sell it today you would earn a total of  142.00  from holding Metro AG or generate 36.32% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Metro AG

Brockhaus Capital

Risk-Adjusted Performance

Very Weak

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

Metro AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metro AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Metro AG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and Metro AG

The main advantage of trading using opposite Brockhaus Capital and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..