Correlation Between VIB Vermgen and Cheniere Energy

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

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

Diversification Opportunities for VIB Vermgen and Cheniere Energy

-0.6

Correlation Coefficient

VIB Vermgen  Cheniere Energy

Excellent diversification

The 3 months correlation between VIB and Cheniere is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding VIB Vermgen AG and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy and VIB Vermgen 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 VIB Vermgen AG are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of VIB Vermgen i.e., VIB Vermgen and Cheniere Energy go up and down completely randomly.

Pair Corralation between VIB Vermgen and Cheniere Energy

Assuming the 90 days trading horizon VIB Vermgen AG is expected to under-perform the Cheniere Energy. In addition to that, VIB Vermgen is 1.3 times more volatile than Cheniere Energy. It trades about -0.06 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.05 per unit of volatility. If you would invest  13,856  in Cheniere Energy on October 4, 2024 and sell it today you would earn a total of  6,214  from holding Cheniere Energy or generate 44.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VIB Vermgen AG  vs.  Cheniere Energy

VIB Vermgen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIB Vermgen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VIB Vermgen is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cheniere Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIB Vermgen and Cheniere Energy

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

The idea behind VIB Vermgen AG and Cheniere Energy 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.