Correlation Between Formuepleje Mix and BankInvest Value

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

By analyzing existing cross correlation between Formuepleje Mix Medium and BankInvest Value Globale, you can compare the effects of market volatilities on Formuepleje Mix and BankInvest Value 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 Formuepleje Mix with a short position of BankInvest Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formuepleje Mix and BankInvest Value.

Diversification Opportunities for Formuepleje Mix and BankInvest Value

0.9

Correlation Coefficient

Formuepleje Mix  BankInvest Value

Almost no diversification

The 3 months correlation between Formuepleje and BankInvest is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Formuepleje Mix Medium and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale and Formuepleje Mix 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 Formuepleje Mix Medium are associated (or correlated) with BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of Formuepleje Mix i.e., Formuepleje Mix and BankInvest Value go up and down completely randomly.

Pair Corralation between Formuepleje Mix and BankInvest Value

Assuming the 90 days trading horizon Formuepleje Mix is expected to generate 1.84 times less return on investment than BankInvest Value. But when comparing it to its historical volatility, Formuepleje Mix Medium is 1.33 times less risky than BankInvest Value. It trades about 0.16 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  9,874  in BankInvest Value Globale on September 5, 2024 and sell it today you would earn a total of  926.00  from holding BankInvest Value Globale or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.18%
Values	Daily Returns

Formuepleje Mix Medium  vs.  BankInvest Value Globale

Formuepleje Mix Medium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Mix Medium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BankInvest Value Globale

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BankInvest Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Formuepleje Mix and BankInvest Value

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

The idea behind Formuepleje Mix Medium and BankInvest Value Globale 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.