Correlation Between Daimler Truck and WIMFARM SA

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

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

Diversification Opportunities for Daimler Truck and WIMFARM SA

-0.49

Correlation Coefficient

Daimler Truck  WIMFARM SA

Very good diversification

The 3 months correlation between Daimler and WIMFARM is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and Daimler Truck 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 Daimler Truck Holding are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Daimler Truck i.e., Daimler Truck and WIMFARM SA go up and down completely randomly.

Pair Corralation between Daimler Truck and WIMFARM SA

Assuming the 90 days trading horizon Daimler Truck is expected to generate 1.1 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, Daimler Truck Holding is 2.29 times less risky than WIMFARM SA. It trades about 0.08 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  311.00  in WIMFARM SA EO on September 3, 2024 and sell it today you would earn a total of  15.00  from holding WIMFARM SA EO or generate 4.82% return on investment over 90 days.

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

Daimler Truck Holding  vs.  WIMFARM SA EO

Daimler Truck Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Daimler Truck may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WIMFARM SA EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Daimler Truck and WIMFARM SA

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

The idea behind Daimler Truck Holding and WIMFARM SA EO 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.