Correlation Between BEL Small and Montea CVA
Can any of the company-specific risk be diversified away by investing in both BEL Small and Montea CVA 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 Montea CVA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEL Small and Montea CVA, you can compare the effects of market volatilities on BEL Small and Montea CVA 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 Montea CVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL Small and Montea CVA.
Diversification Opportunities for BEL Small and Montea CVA
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BEL and Montea is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BEL Small and Montea CVA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montea CVA 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 Montea CVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montea CVA has no effect on the direction of BEL Small i.e., BEL Small and Montea CVA go up and down completely randomly.
Pair Corralation between BEL Small and Montea CVA
Assuming the 90 days trading horizon BEL Small is expected to under-perform the Montea CVA. But the index apears to be less risky and, when comparing its historical volatility, BEL Small is 2.81 times less risky than Montea CVA. The index trades about -0.52 of its potential returns per unit of risk. The Montea CVA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 6,770 in Montea CVA on August 31, 2024 and sell it today you would lose (80.00) from holding Montea CVA or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
BEL Small vs. Montea CVA
Performance |
| Timeline |
BEL Small and Montea CVA Volatility Contrast
Predicted Return Density |
| Returns |
BEL Small
Pair trading matchups for BEL Small
Montea CVA
Pair trading matchups for Montea CVA
Pair Trading with BEL Small and Montea CVA
The main advantage of trading using opposite BEL Small and Montea CVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEL Small position performs unexpectedly, Montea CVA 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 Montea CVA will offset losses from the drop in Montea CVA's long position.| BEL Small vs. Vastned Retail Belgium | BEL Small vs. Retail Estates | BEL Small vs. Home Invest Belgium | BEL Small vs. Shurgard Self Storage |
| Montea CVA vs. Home Invest Belgium | Montea CVA vs. EVS Broadcast Equipment | Montea CVA vs. Vastned Retail Belgium | Montea CVA vs. Shurgard Self Storage |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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