Correlation Between Vastned Retail and Daimler Truck

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

By analyzing existing cross correlation between Vastned Retail NV and Daimler Truck Holding, you can compare the effects of market volatilities on Vastned Retail and Daimler Truck 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 Vastned Retail with a short position of Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and Daimler Truck.

Diversification Opportunities for Vastned Retail and Daimler Truck

-0.44

Correlation Coefficient

Vastned Retail  Daimler Truck

Very good diversification

The 3 months correlation between Vastned and Daimler is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Vastned Retail i.e., Vastned Retail and Daimler Truck go up and down completely randomly.

Pair Corralation between Vastned Retail and Daimler Truck

Assuming the 90 days horizon Vastned Retail is expected to generate 1.27 times less return on investment than Daimler Truck. But when comparing it to its historical volatility, Vastned Retail NV is 1.35 times less risky than Daimler Truck. It trades about 0.05 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,814  in Daimler Truck Holding on October 22, 2024 and sell it today you would earn a total of  1,063  from holding Daimler Truck Holding or generate 37.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.6%
Values	Daily Returns

Vastned Retail NV  vs.  Daimler Truck Holding

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Daimler Truck Holding

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Daimler Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vastned Retail and Daimler Truck

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

The idea behind Vastned Retail NV and Daimler Truck Holding 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.