Correlation Between BEL Small and GIMV NV
Can any of the company-specific risk be diversified away by investing in both BEL Small and GIMV NV 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 BEL Small and GIMV NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEL Small and GIMV NV, you can compare the effects of market volatilities on BEL Small and GIMV NV 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 BEL Small with a short position of GIMV NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL Small and GIMV NV.
Diversification Opportunities for BEL Small and GIMV NV
Poor diversification
The 3 months correlation between BEL and GIMV is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BEL Small and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV NV and BEL Small 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 BEL Small are associated (or correlated) with GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of BEL Small i.e., BEL Small and GIMV NV go up and down completely randomly.
Pair Corralation between BEL Small and GIMV NV
Assuming the 90 days trading horizon BEL Small is expected to under-perform the GIMV NV. But the index apears to be less risky and, when comparing its historical volatility, BEL Small is 2.44 times less risky than GIMV NV. The index trades about -0.28 of its potential returns per unit of risk. The GIMV NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,985 in GIMV NV on August 28, 2024 and sell it today you would earn a total of 150.00 from holding GIMV NV or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEL Small vs. GIMV NV
Performance |
| Timeline |
BEL Small and GIMV NV Volatility Contrast
Predicted Return Density |
| Returns |
BEL Small
Pair trading matchups for BEL Small
GIMV NV
Pair trading matchups for GIMV NV
Pair Trading with BEL Small and GIMV NV
The main advantage of trading using opposite BEL Small and GIMV NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEL Small position performs unexpectedly, GIMV NV 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 GIMV NV will offset losses from the drop in GIMV NV's long position.| BEL Small vs. Home Invest Belgium | BEL Small vs. Shurgard Self Storage | BEL Small vs. Retail Estates | BEL Small vs. Vastned Retail Belgium |
| GIMV NV vs. Groep Brussel Lambert | GIMV NV vs. Sofina Socit Anonyme | GIMV NV vs. Ackermans Van Haaren | GIMV NV vs. KBC Ancora |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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