Correlation Between Shell PLC and OMV AG

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

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

Diversification Opportunities for Shell PLC and OMV AG

0.1

Correlation Coefficient

Shell PLC  OMV AG

Average diversification

The 3 months correlation between Shell and OMV is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shell PLC and OMV AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV AG PK and Shell PLC 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 Shell PLC are associated (or correlated) with OMV AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV AG PK has no effect on the direction of Shell PLC i.e., Shell PLC and OMV AG go up and down completely randomly.

Pair Corralation between Shell PLC and OMV AG

Assuming the 90 days horizon Shell PLC is expected to generate 1.88 times less return on investment than OMV AG. In addition to that, Shell PLC is 1.69 times more volatile than OMV AG PK. It trades about 0.1 of its total potential returns per unit of risk. OMV AG PK is currently generating about 0.32 per unit of volatility. If you would invest  971.00  in OMV AG PK on December 25, 2024 and sell it today you would earn a total of  277.00  from holding OMV AG PK or generate 28.53% return on investment over 90 days.

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

Shell PLC  vs.  OMV AG PK

Shell PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shell PLC reported solid returns over the last few months and may actually be approaching a breakup point.

OMV AG PK

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in OMV AG PK are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, OMV AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shell PLC and OMV AG

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

The idea behind Shell PLC and OMV AG PK 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.