Correlation Between Jones Lang and Vonovia SE

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

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

Diversification Opportunities for Jones Lang and Vonovia SE

0.18

Correlation Coefficient

Jones Lang  Vonovia SE

Average diversification

The 3 months correlation between Jones and Vonovia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Jones Lang LaSalle and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE and Jones Lang 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 Jones Lang LaSalle are associated (or correlated) with Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of Jones Lang i.e., Jones Lang and Vonovia SE go up and down completely randomly.

Pair Corralation between Jones Lang and Vonovia SE

Considering the 90-day investment horizon Jones Lang LaSalle is expected to under-perform the Vonovia SE. But the stock apears to be less risky and, when comparing its historical volatility, Jones Lang LaSalle is 1.34 times less risky than Vonovia SE. The stock trades about -0.14 of its potential returns per unit of risk. The Vonovia SE is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,906  in Vonovia SE on November 29, 2024 and sell it today you would earn a total of  272.00  from holding Vonovia SE or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Jones Lang LaSalle  vs.  Vonovia SE

Jones Lang LaSalle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jones Lang LaSalle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Jones Lang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Vonovia SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vonovia SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vonovia SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jones Lang and Vonovia SE

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

The idea behind Jones Lang LaSalle and Vonovia 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.