Correlation Between VP Bank and Metall Zug

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

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

Diversification Opportunities for VP Bank and Metall Zug

-0.77

Correlation Coefficient

VP Bank  Metall Zug

Pay attention - limited upside

The 3 months correlation between VPBN and Metall is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding VP Bank AG and Metall Zug AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metall Zug AG and VP Bank 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 VP Bank AG are associated (or correlated) with Metall Zug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metall Zug AG has no effect on the direction of VP Bank i.e., VP Bank and Metall Zug go up and down completely randomly.

Pair Corralation between VP Bank and Metall Zug

Assuming the 90 days trading horizon VP Bank AG is expected to generate 0.8 times more return on investment than Metall Zug. However, VP Bank AG is 1.25 times less risky than Metall Zug. It trades about 0.16 of its potential returns per unit of risk. Metall Zug AG is currently generating about -0.18 per unit of risk. If you would invest  7,740  in VP Bank AG on October 15, 2024 and sell it today you would earn a total of  240.00  from holding VP Bank AG or generate 3.1% return on investment over 90 days.

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

VP Bank AG  vs.  Metall Zug AG

VP Bank AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VP Bank AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VP Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Metall Zug AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metall Zug AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with VP Bank and Metall Zug

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

The idea behind VP Bank AG and Metall Zug AG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.