Correlation Between SP Global and FlatexDEGIRO

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

By analyzing existing cross correlation between SP Global and flatexDEGIRO AG, you can compare the effects of market volatilities on SP Global and FlatexDEGIRO 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 SP Global with a short position of FlatexDEGIRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and FlatexDEGIRO.

Diversification Opportunities for SP Global and FlatexDEGIRO

0.35

Correlation Coefficient

SP Global  FlatexDEGIRO

Weak diversification

The 3 months correlation between MHL and FlatexDEGIRO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and flatexDEGIRO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on flatexDEGIRO AG and SP Global 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 SP Global are associated (or correlated) with FlatexDEGIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of flatexDEGIRO AG has no effect on the direction of SP Global i.e., SP Global and FlatexDEGIRO go up and down completely randomly.

Pair Corralation between SP Global and FlatexDEGIRO

Assuming the 90 days horizon SP Global is expected to generate 2.01 times less return on investment than FlatexDEGIRO. But when comparing it to its historical volatility, SP Global is 1.92 times less risky than FlatexDEGIRO. It trades about 0.07 of its potential returns per unit of risk. flatexDEGIRO AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  719.00  in flatexDEGIRO AG on September 28, 2024 and sell it today you would earn a total of  753.00  from holding flatexDEGIRO AG or generate 104.73% return on investment over 90 days.

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

SP Global  vs.  flatexDEGIRO AG

SP Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SP Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SP Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

flatexDEGIRO AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in flatexDEGIRO AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, FlatexDEGIRO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SP Global and FlatexDEGIRO

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

The idea behind SP Global and flatexDEGIRO AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.