Correlation Between New York and Vonovia SE

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

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

Diversification Opportunities for New York and Vonovia SE

0.58

Correlation Coefficient

New York  Vonovia SE

Very weak diversification

The 3 months correlation between New and Vonovia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding New York City 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 New York 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 New York City 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 New York i.e., New York and Vonovia SE go up and down completely randomly.

Pair Corralation between New York and Vonovia SE

Considering the 90-day investment horizon New York City is expected to generate 1.64 times more return on investment than Vonovia SE. However, New York is 1.64 times more volatile than Vonovia SE ADR. It trades about -0.06 of its potential returns per unit of risk. Vonovia SE ADR is currently generating about -0.12 per unit of risk. If you would invest  919.00  in New York City on September 12, 2024 and sell it today you would lose (95.00) from holding New York City or give up 10.34% of portfolio value over 90 days.

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

New York City  vs.  Vonovia SE ADR

New York City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Vonovia SE ADR

Risk-Adjusted Performance

0 of 100

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 New York and Vonovia SE

The main advantage of trading using opposite New York and Vonovia SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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 New York City 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.