Correlation Between ISEQ and ARYZTA AG

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

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

Diversification Opportunities for ISEQ and ARYZTA AG

0.82
  Correlation Coefficient
ISEQ
ARYZTA AG

Very poor diversification

The 3 months correlation between ISEQ and ARYZTA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ISEQ and ARYZTA AG in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on ARYZTA AG and ISEQ 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 ISEQ are associated (or correlated) with ARYZTA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARYZTA AG has no effect on the direction of ISEQ i.e. ISEQ and ARYZTA AG go up and down completely randomly.
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Pair Corralation between ISEQ and ARYZTA AG

Assuming the 30 trading days horizon, ISEQ is expected to generate 2.67 times less return on investment than ARYZTA AG. But when comparing it to its historical volatility, ISEQ is 2.71 times less risky than ARYZTA AG. It trades about 0.09 of its potential returns per unit of risk. ARYZTA AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  31.00  in ARYZTA AG on June 11, 2020 and sell it today you would earn a total of  9.00  from holding ARYZTA AG or generate 29.03% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy96.97%
ValuesDaily Returns

ISEQ  vs.  ARYZTA AG

 Performance (%) 
      Timeline 
 Predicted Return Density 
      Returns 
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