Correlation Between Vonovia SE and CBRE Group

Can any of the company-specific risk be diversified away by investing in both Vonovia SE and CBRE Group 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 Vonovia SE and CBRE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vonovia SE and CBRE Group Class, you can compare the effects of market volatilities on Vonovia SE and CBRE Group 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 Vonovia SE with a short position of CBRE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vonovia SE and CBRE Group.

Diversification Opportunities for Vonovia SE and CBRE Group

-0.74

Correlation Coefficient

Vonovia SE  CBRE Group

Pay attention - limited upside

The 3 months correlation between Vonovia and CBRE is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vonovia SE and CBRE Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group Class and Vonovia SE 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 Vonovia SE are associated (or correlated) with CBRE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group Class has no effect on the direction of Vonovia SE i.e., Vonovia SE and CBRE Group go up and down completely randomly.

Pair Corralation between Vonovia SE and CBRE Group

Assuming the 90 days horizon Vonovia SE is expected to under-perform the CBRE Group. In addition to that, Vonovia SE is 1.88 times more volatile than CBRE Group Class. It trades about -0.02 of its total potential returns per unit of risk. CBRE Group Class is currently generating about 0.19 per unit of volatility. If you would invest  11,566  in CBRE Group Class on September 3, 2024 and sell it today you would earn a total of  2,433  from holding CBRE Group Class or generate 21.04% return on investment over 90 days.

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

Vonovia SE  vs.  CBRE Group Class

Vonovia SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

CBRE Group Class

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBRE Group Class are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, CBRE Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vonovia SE and CBRE Group

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

The idea behind Vonovia SE and CBRE Group Class 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.