Correlation Between RWE AG and RWE AG

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

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

Diversification Opportunities for RWE AG and RWE AG

0.99

Correlation Coefficient

RWE AG  RWE AG

No risk reduction

The 3 months correlation between RWE and RWE is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding RWE AG and RWE AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE AG and RWE AG 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 RWE AG are associated (or correlated) with RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG has no effect on the direction of RWE AG i.e., RWE AG and RWE AG go up and down completely randomly.

Pair Corralation between RWE AG and RWE AG

Assuming the 90 days horizon RWE AG is expected to under-perform the RWE AG. But the stock apears to be less risky and, when comparing its historical volatility, RWE AG is 1.13 times less risky than RWE AG. The stock trades about -0.6 of its potential returns per unit of risk. The RWE AG is currently generating about -0.49 of returns per unit of risk over similar time horizon. If you would invest  3,170  in RWE AG on October 4, 2024 and sell it today you would lose (287.00) from holding RWE AG or give up 9.05% of portfolio value over 90 days.

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

RWE AG  vs.  RWE AG

RWE AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RWE AG 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.

RWE AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RWE AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with RWE AG and RWE AG

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

The idea behind RWE AG and RWE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.