Correlation Between VOLVO B and RTL GROUP

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

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

Diversification Opportunities for VOLVO B and RTL GROUP

-0.26

Correlation Coefficient

VOLVO B  RTL GROUP

Very good diversification

The 3 months correlation between VOLVO and RTL is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding VOLVO B UNSPADR and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR and VOLVO B 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 VOLVO B UNSPADR are associated (or correlated) with RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of VOLVO B i.e., VOLVO B and RTL GROUP go up and down completely randomly.

Pair Corralation between VOLVO B and RTL GROUP

Assuming the 90 days trading horizon VOLVO B is expected to generate 4.11 times less return on investment than RTL GROUP. But when comparing it to its historical volatility, VOLVO B UNSPADR is 4.01 times less risky than RTL GROUP. It trades about 0.03 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  320.00  in RTL GROUP UNSPADR on April 23, 2025 and sell it today you would lose (2.00) from holding RTL GROUP UNSPADR or give up 0.62% of portfolio value over 90 days.

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

VOLVO B UNSPADR  vs.  RTL GROUP UNSPADR

VOLVO B UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, VOLVO B is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RTL GROUP UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RTL GROUP UNSPADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RTL GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VOLVO B and RTL GROUP

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

The idea behind VOLVO B UNSPADR and RTL GROUP UNSPADR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.