Correlation Between Retail Estates and Vienna Insurance

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

By analyzing existing cross correlation between Retail Estates NV and Vienna Insurance Group, you can compare the effects of market volatilities on Retail Estates and Vienna Insurance 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 Retail Estates with a short position of Vienna Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Vienna Insurance.

Diversification Opportunities for Retail Estates and Vienna Insurance

0.22

Correlation Coefficient

Retail Estates  Vienna Insurance

Modest diversification

The 3 months correlation between Retail and Vienna is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance and Retail Estates 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 Retail Estates NV are associated (or correlated) with Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Retail Estates i.e., Retail Estates and Vienna Insurance go up and down completely randomly.

Pair Corralation between Retail Estates and Vienna Insurance

Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Vienna Insurance. In addition to that, Retail Estates is 1.06 times more volatile than Vienna Insurance Group. It trades about -0.04 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.1 per unit of volatility. If you would invest  2,905  in Vienna Insurance Group on October 6, 2024 and sell it today you would earn a total of  115.00  from holding Vienna Insurance Group or generate 3.96% return on investment over 90 days.

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

Retail Estates NV  vs.  Vienna Insurance Group

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vienna Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vienna Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Retail Estates and Vienna Insurance

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

The idea behind Retail Estates NV and Vienna Insurance Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.