Correlation Between EFG International and VAT Group

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

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

Diversification Opportunities for EFG International and VAT Group

0.9

Correlation Coefficient

EFG International  VAT Group

Almost no diversification

The 3 months correlation between EFG and VAT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding EFG International AG and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG and EFG International 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 EFG International AG are associated (or correlated) with VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of EFG International i.e., EFG International and VAT Group go up and down completely randomly.

Pair Corralation between EFG International and VAT Group

Assuming the 90 days trading horizon EFG International AG is expected to generate 0.69 times more return on investment than VAT Group. However, EFG International AG is 1.45 times less risky than VAT Group. It trades about 0.39 of its potential returns per unit of risk. VAT Group AG is currently generating about 0.21 per unit of risk. If you would invest  1,154  in EFG International AG on April 22, 2025 and sell it today you would earn a total of  448.00  from holding EFG International AG or generate 38.82% return on investment over 90 days.

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

EFG International AG  vs.  VAT Group AG

EFG International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EFG International AG are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EFG International showed solid returns over the last few months and may actually be approaching a breakup point.

VAT Group AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VAT Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EFG International and VAT Group

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

The idea behind EFG International AG and VAT Group AG 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.