Correlation Between BEL-20 INDEX and Retail Estates
Can any of the company-specific risk be diversified away by investing in both BEL-20 INDEX and Retail Estates 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-20 INDEX and Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEL-20 INDEX and Retail Estates , you can compare the effects of market volatilities on BEL-20 INDEX and Retail Estates 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-20 INDEX with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEL-20 INDEX and Retail Estates.
Diversification Opportunities for BEL-20 INDEX and Retail Estates
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BEL-20 and Retail is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BEL-20 INDEX and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates and BEL-20 INDEX 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-20 INDEX are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of BEL-20 INDEX i.e., BEL-20 INDEX and Retail Estates go up and down completely randomly.
Pair Corralation between BEL-20 INDEX and Retail Estates
Assuming the 90 days trading horizon BEL-20 INDEX is expected to generate 0.67 times more return on investment than Retail Estates. However, BEL-20 INDEX is 1.49 times less risky than Retail Estates. It trades about 0.1 of its potential returns per unit of risk. Retail Estates is currently generating about 0.03 per unit of risk. If you would invest 366,142 in BEL-20 INDEX on August 27, 2024 and sell it today you would earn a total of 56,687 from holding BEL-20 INDEX or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BEL-20 INDEX vs. Retail Estates
Performance |
| Timeline |
BEL-20 INDEX and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
BEL-20 INDEX
Pair trading matchups for BEL-20 INDEX
Retail Estates
Pair trading matchups for Retail Estates
Pair Trading with BEL-20 INDEX and Retail Estates
The main advantage of trading using opposite BEL-20 INDEX and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEL-20 INDEX position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| BEL-20 INDEX vs. Retail Estates | BEL-20 INDEX vs. Shurgard Self Storage | BEL-20 INDEX vs. Vastned Retail Belgium | BEL-20 INDEX vs. Immolease Trust NV |
| Retail Estates vs. Cofinimmo SA | Retail Estates vs. Warehouses de Pauw | Retail Estates vs. Montea CVA | Retail Estates vs. Aedifica |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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