Correlation Between BEL Small and Van De
Can any of the company-specific risk be diversified away by investing in both BEL Small and Van De 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 Van De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEL Small and Van de Velde, you can compare the effects of market volatilities on BEL Small and Van De 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 Van De. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL Small and Van De.
Diversification Opportunities for BEL Small and Van De
Poor diversification
The 3 months correlation between BEL and Van is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BEL Small and Van de Velde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van de Velde 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 Van De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van de Velde has no effect on the direction of BEL Small i.e., BEL Small and Van De go up and down completely randomly.
Pair Corralation between BEL Small and Van De
Assuming the 90 days trading horizon BEL Small is expected to under-perform the Van De. But the index apears to be less risky and, when comparing its historical volatility, BEL Small is 2.03 times less risky than Van De. The index trades about -0.18 of its potential returns per unit of risk. The Van de Velde is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 3,250 in Van de Velde on September 1, 2024 and sell it today you would lose (350.00) from holding Van de Velde or give up 10.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEL Small vs. Van de Velde
Performance |
| Timeline |
BEL Small and Van De Volatility Contrast
Predicted Return Density |
| Returns |
BEL Small
Pair trading matchups for BEL Small
Van de Velde
Pair trading matchups for Van De
Pair Trading with BEL Small and Van De
The main advantage of trading using opposite BEL Small and Van De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEL Small position performs unexpectedly, Van De 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 Van De will offset losses from the drop in Van De's long position.| BEL Small vs. Shurgard Self Storage | BEL Small vs. Retail Estates | BEL Small vs. Vastned Retail Belgium | BEL Small vs. Ion Beam Applications |
| Van De vs. EVS Broadcast Equipment | Van De vs. NV Bekaert SA | Van De vs. Tessenderlo | Van De vs. Melexis NV |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Correlations Find global opportunities by holding instruments from different markets |