Correlation Between Vonovia SE and Vonovia SE

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

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

Diversification Opportunities for Vonovia SE and Vonovia SE

0.62

Correlation Coefficient

Vonovia SE  Vonovia SE

Poor diversification

The 3 months correlation between Vonovia and Vonovia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vonovia SE ADR and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE 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 ADR are associated (or correlated) with Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of Vonovia SE i.e., Vonovia SE and Vonovia SE go up and down completely randomly.

Pair Corralation between Vonovia SE and Vonovia SE

Assuming the 90 days horizon Vonovia SE is expected to generate 2.76 times less return on investment than Vonovia SE. But when comparing it to its historical volatility, Vonovia SE ADR is 1.51 times less risky than Vonovia SE. It trades about 0.03 of its potential returns per unit of risk. Vonovia SE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,930  in Vonovia SE on November 20, 2024 and sell it today you would earn a total of  170.00  from holding Vonovia SE or generate 5.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Vonovia SE ADR  vs.  Vonovia SE

Vonovia SE ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vonovia SE ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Vonovia SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vonovia SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vonovia SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Vonovia SE may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Vonovia SE and Vonovia SE

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

The idea behind Vonovia SE ADR and Vonovia SE 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.