Correlation Between Talanx AG and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Genuine Parts 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 Genuine Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Genuine Parts, you can compare the effects of market volatilities on Talanx AG and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Genuine Parts.
Diversification Opportunities for Talanx AG and Genuine Parts
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talanx and Genuine is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Talanx AG i.e., Talanx AG and Genuine Parts go up and down completely randomly.
Pair Corralation between Talanx AG and Genuine Parts
Assuming the 90 days horizon Talanx AG is expected to generate 0.42 times more return on investment than Genuine Parts. However, Talanx AG is 2.39 times less risky than Genuine Parts. It trades about 0.04 of its potential returns per unit of risk. Genuine Parts is currently generating about -0.01 per unit of risk. If you would invest 7,755 in Talanx AG on September 4, 2024 and sell it today you would earn a total of 210.00 from holding Talanx AG or generate 2.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Talanx AG vs. Genuine Parts
Performance |
Timeline |
Talanx AG |
Genuine Parts |
Talanx AG and Genuine Parts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Talanx AG and Genuine Parts
The main advantage of trading using opposite Talanx AG and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.Talanx AG vs. BJs Wholesale Club | Talanx AG vs. American Eagle Outfitters | Talanx AG vs. AEON STORES | Talanx AG vs. URBAN OUTFITTERS |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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