Correlation Between RTL Group and RTL Group

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

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

Diversification Opportunities for RTL Group and RTL Group

0.98

Correlation Coefficient

RTL Group  RTL Group

Almost no diversification

The 3 months correlation between RTL and RTL is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA and RTL Group 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 RTL Group SA are associated (or correlated) with RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of RTL Group i.e., RTL Group and RTL Group go up and down completely randomly.

Pair Corralation between RTL Group and RTL Group

Assuming the 90 days trading horizon RTL Group is expected to generate 1.07 times less return on investment than RTL Group. But when comparing it to its historical volatility, RTL Group SA is 1.26 times less risky than RTL Group. It trades about 0.33 of its potential returns per unit of risk. RTL Group SA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,630  in RTL Group SA on December 22, 2024 and sell it today you would earn a total of  935.00  from holding RTL Group SA or generate 35.55% return on investment over 90 days.

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

RTL Group SA  vs.  RTL Group SA

RTL Group SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, RTL Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

RTL Group SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RTL Group SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RTL Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RTL Group and RTL Group

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

The idea behind RTL Group SA and RTL Group SA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.