Correlation Between Deka EURO and Expat Czech
Can any of the company-specific risk be diversified away by investing in both Deka EURO and Expat Czech 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 Deka EURO and Expat Czech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deka EURO STOXX and Expat Czech PX, you can compare the effects of market volatilities on Deka EURO and Expat Czech 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 Deka EURO with a short position of Expat Czech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deka EURO and Expat Czech.
Diversification Opportunities for Deka EURO and Expat Czech
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deka and Expat is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Deka EURO STOXX and Expat Czech PX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Czech PX and Deka EURO 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 Deka EURO STOXX are associated (or correlated) with Expat Czech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Czech PX has no effect on the direction of Deka EURO i.e., Deka EURO and Expat Czech go up and down completely randomly.
Pair Corralation between Deka EURO and Expat Czech
Assuming the 90 days trading horizon Deka EURO STOXX is expected to generate 0.27 times more return on investment than Expat Czech. However, Deka EURO STOXX is 3.72 times less risky than Expat Czech. It trades about 0.45 of its potential returns per unit of risk. Expat Czech PX is currently generating about 0.1 per unit of risk. If you would invest 1,616 in Deka EURO STOXX on December 27, 2024 and sell it today you would earn a total of 323.00 from holding Deka EURO STOXX or generate 19.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.41% |
Values | Daily Returns |
Deka EURO STOXX vs. Expat Czech PX
Performance |
Timeline |
Deka EURO STOXX |
Expat Czech PX |
Deka EURO and Expat Czech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deka EURO and Expat Czech
The main advantage of trading using opposite Deka EURO and Expat Czech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deka EURO position performs unexpectedly, Expat Czech 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 Expat Czech will offset losses from the drop in Expat Czech's long position.Deka EURO vs. Deka Deutsche Brse | Deka EURO vs. Deka MSCI World | Deka EURO vs. Deka iBoxx EUR | Deka EURO vs. Deka MDAX UCITS |
Expat Czech vs. Expat Czech PX | Expat Czech vs. Expat Croatia Crobex | Expat Czech vs. Expat Serbia Belex15 | Expat Czech vs. Expat Poland WIG20 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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