Correlation Between Vinci S and UmweltBank

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

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

Diversification Opportunities for Vinci S and UmweltBank

-0.92

Correlation Coefficient

Vinci S  UmweltBank

Pay attention - limited upside

The 3 months correlation between Vinci and UmweltBank is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vinci S A and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG and Vinci S 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 Vinci S A are associated (or correlated) with UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of Vinci S i.e., Vinci S and UmweltBank go up and down completely randomly.

Pair Corralation between Vinci S and UmweltBank

Assuming the 90 days horizon Vinci S A is expected to generate 0.71 times more return on investment than UmweltBank. However, Vinci S A is 1.41 times less risky than UmweltBank. It trades about 0.25 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.15 per unit of risk. If you would invest  9,804  in Vinci S A on December 22, 2024 and sell it today you would earn a total of  2,096  from holding Vinci S A or generate 21.38% return on investment over 90 days.

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

Vinci S A  vs.  UmweltBank AG

Vinci S A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci S A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vinci S reported solid returns over the last few months and may actually be approaching a breakup point.

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vinci S and UmweltBank

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

The idea behind Vinci S A and UmweltBank 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.