Correlation Between Talanx AG and Restaurant Brands

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

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

Diversification Opportunities for Talanx AG and Restaurant Brands

0.16

Correlation Coefficient

Talanx AG  Restaurant Brands

Average diversification

The 3 months correlation between Talanx and Restaurant is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Talanx 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 Talanx AG are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Talanx AG i.e., Talanx AG and Restaurant Brands go up and down completely randomly.

Pair Corralation between Talanx AG and Restaurant Brands

Assuming the 90 days horizon Talanx AG is expected to generate 1.0 times more return on investment than Restaurant Brands. However, Talanx AG is 1.0 times more volatile than Restaurant Brands International. It trades about 0.08 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.0 per unit of risk. If you would invest  6,171  in Talanx AG on October 11, 2024 and sell it today you would earn a total of  2,139  from holding Talanx AG or generate 34.66% return on investment over 90 days.

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

Talanx AG  vs.  Restaurant Brands Internationa

Talanx AG

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Restaurant Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Restaurant Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Restaurant Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Talanx AG and Restaurant Brands

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

The idea behind Talanx AG and Restaurant Brands International 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.