Correlation Between Varta AG and VERTIV HOLCL

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

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

Diversification Opportunities for Varta AG and VERTIV HOLCL

0.43

Correlation Coefficient

Varta AG  VERTIV HOLCL

Very weak diversification

The 3 months correlation between Varta and VERTIV is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and VERTIV HOLCL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERTIV HOLCL A and Varta 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 Varta AG are associated (or correlated) with VERTIV HOLCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERTIV HOLCL A has no effect on the direction of Varta AG i.e., Varta AG and VERTIV HOLCL go up and down completely randomly.

Pair Corralation between Varta AG and VERTIV HOLCL

If you would invest (100.00) in Varta AG on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Varta AG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Varta AG  vs.  VERTIV HOLCL A

Varta AG

Risk-Adjusted Performance

Very Weak

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

VERTIV HOLCL A

Risk-Adjusted Performance

Very Weak

Over the last 90 days VERTIV HOLCL A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Varta AG and VERTIV HOLCL

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

The idea behind Varta AG and VERTIV HOLCL A 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.