Correlation Between National Retail and Sporttotal

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

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

Diversification Opportunities for National Retail and Sporttotal

-0.34

Correlation Coefficient

National Retail  Sporttotal

Very good diversification

The 3 months correlation between National and Sporttotal is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal AG and National Retail 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 National Retail Properties are associated (or correlated) with Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of National Retail i.e., National Retail and Sporttotal go up and down completely randomly.

Pair Corralation between National Retail and Sporttotal

Assuming the 90 days trading horizon National Retail is expected to generate 115.53 times less return on investment than Sporttotal. But when comparing it to its historical volatility, National Retail Properties is 33.51 times less risky than Sporttotal. It trades about 0.03 of its potential returns per unit of risk. Sporttotal AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Sporttotal AG on December 30, 2024 and sell it today you would lose (18.80) from holding Sporttotal AG or give up 81.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

National Retail Properties  vs.  Sporttotal AG

National Retail Prop

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sporttotal AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sporttotal AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Sporttotal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Retail and Sporttotal

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

The idea behind National Retail Properties and Sporttotal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.