Correlation Between Strategic Investments and Sixt SE

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

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

Diversification Opportunities for Strategic Investments and Sixt SE

-0.01

Correlation Coefficient

Strategic Investments  Sixt SE

Good diversification

The 3 months correlation between Strategic and Sixt is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of Strategic Investments i.e., Strategic Investments and Sixt SE go up and down completely randomly.

Pair Corralation between Strategic Investments and Sixt SE

Assuming the 90 days horizon Strategic Investments is expected to generate 1.85 times less return on investment than Sixt SE. In addition to that, Strategic Investments is 5.64 times more volatile than Sixt SE. It trades about 0.02 of its total potential returns per unit of risk. Sixt SE is currently generating about 0.25 per unit of volatility. If you would invest  6,840  in Sixt SE on December 2, 2024 and sell it today you would earn a total of  1,710  from holding Sixt SE or generate 25.0% return on investment over 90 days.

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

Strategic Investments AS  vs.  Sixt SE

Strategic Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Strategic Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Sixt SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Sixt SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and Sixt SE

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

The idea behind Strategic Investments AS and Sixt SE 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.