Correlation Between Aedifica and Vastned Retail
Can any of the company-specific risk be diversified away by investing in both Aedifica and Vastned Retail 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 Aedifica and Vastned Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedifica and Vastned Retail Belgium, you can compare the effects of market volatilities on Aedifica and Vastned Retail 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 Aedifica with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedifica and Vastned Retail.
Diversification Opportunities for Aedifica and Vastned Retail
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aedifica and Vastned is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aedifica and Vastned Retail Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail Belgium and Aedifica 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 Aedifica are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail Belgium has no effect on the direction of Aedifica i.e., Aedifica and Vastned Retail go up and down completely randomly.
Pair Corralation between Aedifica and Vastned Retail
Assuming the 90 days trading horizon Aedifica is expected to generate 1.0 times more return on investment than Vastned Retail. However, Aedifica is 1.0 times more volatile than Vastned Retail Belgium. It trades about -0.05 of its potential returns per unit of risk. Vastned Retail Belgium is currently generating about -0.11 per unit of risk. If you would invest 5,905 in Aedifica on September 1, 2024 and sell it today you would lose (100.00) from holding Aedifica or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedifica vs. Vastned Retail Belgium
Performance |
| Timeline |
| Aedifica |
| Vastned Retail Belgium |
Aedifica and Vastned Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedifica and Vastned Retail
The main advantage of trading using opposite Aedifica and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedifica position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail's long position.| Aedifica vs. Cofinimmo SA | Aedifica vs. Warehouses de Pauw | Aedifica vs. Care Property Invest | Aedifica vs. Xior Student Housing |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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