Correlation Between VAT Group and Stadler Rail
Can any of the company-specific risk be diversified away by investing in both VAT Group and Stadler Rail 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 VAT Group and Stadler Rail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VAT Group AG and Stadler Rail AG, you can compare the effects of market volatilities on VAT Group and Stadler Rail 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 VAT Group with a short position of Stadler Rail. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Stadler Rail.
Diversification Opportunities for VAT Group and Stadler Rail
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VAT and Stadler is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Stadler Rail AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadler Rail AG and VAT Group 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 VAT Group AG are associated (or correlated) with Stadler Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadler Rail AG has no effect on the direction of VAT Group i.e., VAT Group and Stadler Rail go up and down completely randomly.
Pair Corralation between VAT Group and Stadler Rail
Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Stadler Rail. In addition to that, VAT Group is 1.1 times more volatile than Stadler Rail AG. It trades about -0.09 of its total potential returns per unit of risk. Stadler Rail AG is currently generating about 0.08 per unit of volatility. If you would invest 1,996 in Stadler Rail AG on December 3, 2024 and sell it today you would earn a total of 44.00 from holding Stadler Rail AG or generate 2.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
VAT Group AG vs. Stadler Rail AG
Performance |
Timeline |
VAT Group AG |
Stadler Rail AG |
VAT Group and Stadler Rail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VAT Group and Stadler Rail
The main advantage of trading using opposite VAT Group and Stadler Rail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, Stadler Rail 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 Stadler Rail will offset losses from the drop in Stadler Rail's long position.VAT Group vs. Sika AG | VAT Group vs. Straumann Holding AG | VAT Group vs. Geberit AG | VAT Group vs. Partners Group Holding |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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