Correlation Between Sixt SE and National Grid
Can any of the company-specific risk be diversified away by investing in both Sixt SE and National Grid 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 Sixt SE and National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixt SE and National Grid PLC, you can compare the effects of market volatilities on Sixt SE and National Grid 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 Sixt SE with a short position of National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt SE and National Grid.
Diversification Opportunities for Sixt SE and National Grid
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sixt and National is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sixt SE and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC and Sixt SE 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 Sixt SE are associated (or correlated) with National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of Sixt SE i.e., Sixt SE and National Grid go up and down completely randomly.
Pair Corralation between Sixt SE and National Grid
Assuming the 90 days trading horizon Sixt SE is expected to generate 3.3 times less return on investment than National Grid. But when comparing it to its historical volatility, Sixt SE is 1.06 times less risky than National Grid. It trades about 0.01 of its potential returns per unit of risk. National Grid PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,039 in National Grid PLC on September 24, 2024 and sell it today you would earn a total of 71.00 from holding National Grid PLC or generate 6.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sixt SE vs. National Grid PLC
Performance |
Timeline |
Sixt SE |
National Grid PLC |
Sixt SE and National Grid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sixt SE and National Grid
The main advantage of trading using opposite Sixt SE and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt SE position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.Sixt SE vs. Ashtead Group plc | Sixt SE vs. WillScot Mobile Mini | Sixt SE vs. Avis Budget Group | Sixt SE vs. Sixt SE |
National Grid vs. Iberdrola SA | National Grid vs. Enel SpA | National Grid vs. Enel SpA | National Grid vs. Sempra |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |