Correlation Between Rieter Holding and SPDR Dow

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

By analyzing existing cross correlation between Rieter Holding AG and SPDR Dow Jones, you can compare the effects of market volatilities on Rieter Holding and SPDR Dow 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 Rieter Holding with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rieter Holding and SPDR Dow.

Diversification Opportunities for Rieter Holding and SPDR Dow

-0.17

Correlation Coefficient

Rieter Holding  SPDR Dow

Good diversification

The 3 months correlation between Rieter and SPDR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rieter Holding AG and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and Rieter Holding 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 Rieter Holding AG are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Rieter Holding i.e., Rieter Holding and SPDR Dow go up and down completely randomly.

Pair Corralation between Rieter Holding and SPDR Dow

Assuming the 90 days trading horizon Rieter Holding is expected to generate 1.91 times less return on investment than SPDR Dow. In addition to that, Rieter Holding is 2.24 times more volatile than SPDR Dow Jones. It trades about 0.02 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.07 per unit of volatility. If you would invest  1,507  in SPDR Dow Jones on September 14, 2024 and sell it today you would earn a total of  256.00  from holding SPDR Dow Jones or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Rieter Holding AG  vs.  SPDR Dow Jones

Rieter Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rieter Holding 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.

SPDR Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR Dow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rieter Holding and SPDR Dow

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

The idea behind Rieter Holding AG and SPDR Dow Jones 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.