Correlation Between GRUPO ECOENER and Deutsche Pfandbriefbank

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

By analyzing existing cross correlation between GRUPO ECOENER EO and Deutsche Pfandbriefbank AG, you can compare the effects of market volatilities on GRUPO ECOENER and Deutsche Pfandbriefbank 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 GRUPO ECOENER with a short position of Deutsche Pfandbriefbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO ECOENER and Deutsche Pfandbriefbank.

Diversification Opportunities for GRUPO ECOENER and Deutsche Pfandbriefbank

-0.69

Correlation Coefficient

GRUPO ECOENER  Deutsche Pfandbriefbank

Excellent diversification

The 3 months correlation between GRUPO and Deutsche is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO ECOENER EO and Deutsche Pfandbriefbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Pfandbriefbank and GRUPO ECOENER 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 GRUPO ECOENER EO are associated (or correlated) with Deutsche Pfandbriefbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Pfandbriefbank has no effect on the direction of GRUPO ECOENER i.e., GRUPO ECOENER and Deutsche Pfandbriefbank go up and down completely randomly.

Pair Corralation between GRUPO ECOENER and Deutsche Pfandbriefbank

Assuming the 90 days horizon GRUPO ECOENER EO is expected to generate 0.59 times more return on investment than Deutsche Pfandbriefbank. However, GRUPO ECOENER EO is 1.68 times less risky than Deutsche Pfandbriefbank. It trades about 0.16 of its potential returns per unit of risk. Deutsche Pfandbriefbank AG is currently generating about -0.21 per unit of risk. If you would invest  420.00  in GRUPO ECOENER EO on September 25, 2024 and sell it today you would earn a total of  13.00  from holding GRUPO ECOENER EO or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

GRUPO ECOENER EO  vs.  Deutsche Pfandbriefbank AG

GRUPO ECOENER EO

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO ECOENER EO are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GRUPO ECOENER reported solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Pfandbriefbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Pfandbriefbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GRUPO ECOENER and Deutsche Pfandbriefbank

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

The idea behind GRUPO ECOENER EO and Deutsche Pfandbriefbank 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.