Correlation Between Vonovia SE and COSTAR GROUP

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

By analyzing existing cross correlation between Vonovia SE and COSTAR GROUP INC, you can compare the effects of market volatilities on Vonovia SE and COSTAR GROUP 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 COSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vonovia SE and COSTAR GROUP.

Diversification Opportunities for Vonovia SE and COSTAR GROUP

0.01

Correlation Coefficient

Vonovia SE  COSTAR GROUP

Significant diversification

The 3 months correlation between Vonovia and COSTAR is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vonovia SE and COSTAR GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTAR GROUP INC 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 COSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTAR GROUP INC has no effect on the direction of Vonovia SE i.e., Vonovia SE and COSTAR GROUP go up and down completely randomly.

Pair Corralation between Vonovia SE and COSTAR GROUP

Assuming the 90 days horizon Vonovia SE is expected to generate 0.79 times more return on investment than COSTAR GROUP. However, Vonovia SE is 1.27 times less risky than COSTAR GROUP. It trades about 0.1 of its potential returns per unit of risk. COSTAR GROUP INC is currently generating about 0.04 per unit of risk. If you would invest  2,664  in Vonovia SE on September 6, 2024 and sell it today you would earn a total of  500.00  from holding Vonovia SE or generate 18.77% return on investment over 90 days.

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

Vonovia SE  vs.  COSTAR GROUP INC

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 nearly stable basic indicators, Vonovia SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COSTAR GROUP INC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSTAR GROUP INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSTAR GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vonovia SE and COSTAR GROUP

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

The idea behind Vonovia SE and COSTAR GROUP INC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.