Correlation Between ÜSTRA Hannoversche and Peabody Energy
Can any of the company-specific risk be diversified away by investing in both ÜSTRA Hannoversche and Peabody Energy 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 ÜSTRA Hannoversche and Peabody Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRA Hannoversche Verkehrsbetriebe and Peabody Energy, you can compare the effects of market volatilities on ÜSTRA Hannoversche and Peabody Energy 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 ÜSTRA Hannoversche with a short position of Peabody Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ÜSTRA Hannoversche and Peabody Energy.
Diversification Opportunities for ÜSTRA Hannoversche and Peabody Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ÜSTRA and Peabody is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and Peabody Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy and ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe are associated (or correlated) with Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and Peabody Energy go up and down completely randomly.
Pair Corralation between ÜSTRA Hannoversche and Peabody Energy
Assuming the 90 days horizon STRA Hannoversche Verkehrsbetriebe is expected to generate 0.78 times more return on investment than Peabody Energy. However, STRA Hannoversche Verkehrsbetriebe is 1.28 times less risky than Peabody Energy. It trades about 0.04 of its potential returns per unit of risk. Peabody Energy is currently generating about -0.32 per unit of risk. If you would invest 940.00 in STRA Hannoversche Verkehrsbetriebe on December 3, 2024 and sell it today you would earn a total of 30.00 from holding STRA Hannoversche Verkehrsbetriebe or generate 3.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
STRA Hannoversche Verkehrsbetr vs. Peabody Energy
Performance |
Timeline |
ÜSTRA Hannoversche |
Peabody Energy |
ÜSTRA Hannoversche and Peabody Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ÜSTRA Hannoversche and Peabody Energy
The main advantage of trading using opposite ÜSTRA Hannoversche and Peabody Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ÜSTRA Hannoversche position performs unexpectedly, Peabody Energy 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 Peabody Energy will offset losses from the drop in Peabody Energy's long position.ÜSTRA Hannoversche vs. Tsingtao Brewery | ÜSTRA Hannoversche vs. Fevertree Drinks PLC | ÜSTRA Hannoversche vs. Corsair Gaming | ÜSTRA Hannoversche vs. Media and Games |
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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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