Correlation Between RWE AG and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both RWE AG and Virtus Investment 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 Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RWE AG and Virtus Investment Partners, you can compare the effects of market volatilities on RWE AG and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of RWE AG and Virtus Investment.
Diversification Opportunities for RWE AG and Virtus Investment
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RWE and Virtus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding RWE AG and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of RWE AG i.e., RWE AG and Virtus Investment go up and down completely randomly.
Pair Corralation between RWE AG and Virtus Investment
Assuming the 90 days horizon RWE AG is expected to generate 0.57 times more return on investment than Virtus Investment. However, RWE AG is 1.75 times less risky than Virtus Investment. It trades about -0.6 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.39 per unit of risk. If you would invest 3,165 in RWE AG on October 4, 2024 and sell it today you would lose (306.00) from holding RWE AG or give up 9.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
RWE AG vs. Virtus Investment Partners
Performance |
Timeline |
RWE AG |
Virtus Investment |
RWE AG and Virtus Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RWE AG and Virtus Investment
The main advantage of trading using opposite RWE AG and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RWE AG position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.RWE AG vs. Superior Plus Corp | RWE AG vs. NMI Holdings | RWE AG vs. Origin Agritech | RWE AG vs. SIVERS SEMICONDUCTORS AB |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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