Correlation Between Talanx AG and EBay

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

By analyzing existing cross correlation between Talanx AG and eBay Inc, you can compare the effects of market volatilities on Talanx AG and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and EBay.

Diversification Opportunities for Talanx AG and EBay

-0.36

Correlation Coefficient

Talanx AG  EBay

Very good diversification

The 3 months correlation between Talanx and EBay is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Talanx AG i.e., Talanx AG and EBay go up and down completely randomly.

Pair Corralation between Talanx AG and EBay

Assuming the 90 days horizon Talanx AG is expected to generate 0.53 times more return on investment than EBay. However, Talanx AG is 1.89 times less risky than EBay. It trades about 0.22 of its potential returns per unit of risk. eBay Inc is currently generating about 0.03 per unit of risk. If you would invest  8,125  in Talanx AG on December 28, 2024 and sell it today you would earn a total of  1,640  from holding Talanx AG or generate 20.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Talanx AG  vs.  eBay Inc

Talanx AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

eBay Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EBay 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 EBay

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

The idea behind Talanx AG and eBay Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.