Correlation Between Marcus Millichap and Vonovia SE

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

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

Diversification Opportunities for Marcus Millichap and Vonovia SE

0.43

Correlation Coefficient

Marcus Millichap  Vonovia SE

Very weak diversification

The 3 months correlation between Marcus and Vonovia is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and Vonovia SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE ADR and Marcus Millichap 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 Marcus Millichap 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 ADR has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and Vonovia SE go up and down completely randomly.

Pair Corralation between Marcus Millichap and Vonovia SE

Considering the 90-day investment horizon Marcus Millichap is expected to generate 1.04 times more return on investment than Vonovia SE. However, Marcus Millichap is 1.04 times more volatile than Vonovia SE ADR. It trades about -0.04 of its potential returns per unit of risk. Vonovia SE ADR is currently generating about -0.09 per unit of risk. If you would invest  3,773  in Marcus Millichap on December 29, 2024 and sell it today you would lose (242.00) from holding Marcus Millichap or give up 6.41% of portfolio value over 90 days.

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

Marcus Millichap  vs.  Vonovia SE ADR

Marcus Millichap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus Millichap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Marcus Millichap is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Vonovia SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vonovia SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marcus Millichap and Vonovia SE

The main advantage of trading using opposite Marcus Millichap and Vonovia SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcus Millichap 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 Marcus Millichap and Vonovia SE ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.