Correlation Between Vonovia SE and Wharf Real

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

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

Diversification Opportunities for Vonovia SE and Wharf Real

0.69

Correlation Coefficient

Vonovia SE  Wharf Real

Poor diversification

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

Pair Corralation between Vonovia SE and Wharf Real

Assuming the 90 days horizon Vonovia SE is expected to under-perform the Wharf Real. But the stock apears to be less risky and, when comparing its historical volatility, Vonovia SE is 1.18 times less risky than Wharf Real. The stock trades about -0.09 of its potential returns per unit of risk. The Wharf Real Estate is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  246.00  in Wharf Real Estate on September 24, 2024 and sell it today you would lose (6.00) from holding Wharf Real Estate or give up 2.44% of portfolio value over 90 days.

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

Vonovia SE  vs.  Wharf Real Estate

Vonovia SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vonovia SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wharf Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wharf Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vonovia SE and Wharf Real

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

The idea behind Vonovia SE and Wharf Real Estate 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.