Correlation Between NV Bekaert and Floridienne
Can any of the company-specific risk be diversified away by investing in both NV Bekaert and Floridienne 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 NV Bekaert and Floridienne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NV Bekaert SA and Floridienne, you can compare the effects of market volatilities on NV Bekaert and Floridienne 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 NV Bekaert with a short position of Floridienne. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Bekaert and Floridienne.
Diversification Opportunities for NV Bekaert and Floridienne
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BEKB and Floridienne is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Floridienne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floridienne and NV Bekaert 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 NV Bekaert SA are associated (or correlated) with Floridienne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floridienne has no effect on the direction of NV Bekaert i.e., NV Bekaert and Floridienne go up and down completely randomly.
Pair Corralation between NV Bekaert and Floridienne
Assuming the 90 days trading horizon NV Bekaert SA is expected to generate 0.61 times more return on investment than Floridienne. However, NV Bekaert SA is 1.64 times less risky than Floridienne. It trades about -0.04 of its potential returns per unit of risk. Floridienne is currently generating about -0.03 per unit of risk. If you would invest 4,084 in NV Bekaert SA on August 31, 2024 and sell it today you would lose (818.00) from holding NV Bekaert SA or give up 20.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
NV Bekaert SA vs. Floridienne
Performance |
| Timeline |
| NV Bekaert SA |
| Floridienne |
NV Bekaert and Floridienne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NV Bekaert and Floridienne
The main advantage of trading using opposite NV Bekaert and Floridienne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Bekaert position performs unexpectedly, Floridienne 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 Floridienne will offset losses from the drop in Floridienne's long position.| NV Bekaert vs. Solvay SA | NV Bekaert vs. Ackermans Van Haaren | NV Bekaert vs. Barco NV | NV Bekaert vs. Etablissementen Franz Colruyt |
| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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