Correlation Between Wirecard and Almaden Minerals

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

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

Diversification Opportunities for Wirecard and Almaden Minerals

0.01

Correlation Coefficient

Wirecard  Almaden Minerals

Significant diversification

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

Pair Corralation between Wirecard and Almaden Minerals

Assuming the 90 days horizon Wirecard AG is expected to generate 24.91 times more return on investment than Almaden Minerals. However, Wirecard is 24.91 times more volatile than Almaden Minerals. It trades about 0.12 of its potential returns per unit of risk. Almaden Minerals is currently generating about 0.16 per unit of risk. If you would invest  1.00  in Wirecard AG on January 16, 2024 and sell it today you would lose (0.50) from holding Wirecard AG or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Wirecard AG  vs.  Almaden Minerals

Wirecard AG

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wirecard AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Wirecard reported solid returns over the last few months and may actually be approaching a breakup point.

Almaden Minerals

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Almaden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Almaden Minerals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wirecard and Almaden Minerals

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

The idea behind Wirecard AG and Almaden Minerals 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.