Correlation Between Marcopolo and Wetzel SA

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

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

Diversification Opportunities for Marcopolo and Wetzel SA

0.51

Correlation Coefficient

Marcopolo  Wetzel SA

Very weak diversification

The 3 months correlation between Marcopolo and Wetzel is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA and Marcopolo 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 Marcopolo SA are associated (or correlated) with Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of Marcopolo i.e., Marcopolo and Wetzel SA go up and down completely randomly.

Pair Corralation between Marcopolo and Wetzel SA

Assuming the 90 days trading horizon Marcopolo is expected to generate 39.55 times less return on investment than Wetzel SA. But when comparing it to its historical volatility, Marcopolo SA is 3.16 times less risky than Wetzel SA. It trades about 0.01 of its potential returns per unit of risk. Wetzel SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  857.00  in Wetzel SA on September 24, 2024 and sell it today you would earn a total of  403.00  from holding Wetzel SA or generate 47.02% return on investment over 90 days.

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

Marcopolo SA  vs.  Wetzel SA

Marcopolo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marcopolo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Marcopolo is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wetzel SA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Wetzel SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Wetzel SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marcopolo and Wetzel SA

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

The idea behind Marcopolo SA and Wetzel SA 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.