Correlation Between Continental Aktiengesellscha and Vanguard Funds

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

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

Diversification Opportunities for Continental Aktiengesellscha and Vanguard Funds

0.88

Correlation Coefficient

Continental Aktiengesellscha  Vanguard Funds

Very poor diversification

The 3 months correlation between Continental and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Vanguard Funds go up and down completely randomly.

Pair Corralation between Continental Aktiengesellscha and Vanguard Funds

Assuming the 90 days trading horizon Continental Aktiengesellschaft is expected to generate 2.24 times more return on investment than Vanguard Funds. However, Continental Aktiengesellscha is 2.24 times more volatile than Vanguard Funds Public. It trades about 0.07 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.15 per unit of risk. If you would invest  6,030  in Continental Aktiengesellschaft on September 21, 2024 and sell it today you would earn a total of  390.00  from holding Continental Aktiengesellschaft or generate 6.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.73%
Values	Daily Returns

Continental Aktiengesellschaft  vs.  Vanguard Funds Public

Continental Aktiengesellscha

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Continental Aktiengesellscha unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Funds Public

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Continental Aktiengesellscha and Vanguard Funds

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

The idea behind Continental Aktiengesellschaft and Vanguard Funds Public 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.