Correlation Between Bpost NV and Elia Group
Can any of the company-specific risk be diversified away by investing in both Bpost NV and Elia Group 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 Bpost NV and Elia Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bpost NV and Elia Group SANV, you can compare the effects of market volatilities on Bpost NV and Elia Group 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 Bpost NV with a short position of Elia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bpost NV and Elia Group.
Diversification Opportunities for Bpost NV and Elia Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bpost and Elia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bpost NV and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV and Bpost NV 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 Bpost NV are associated (or correlated) with Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of Bpost NV i.e., Bpost NV and Elia Group go up and down completely randomly.
Pair Corralation between Bpost NV and Elia Group
Assuming the 90 days trading horizon Bpost NV is expected to under-perform the Elia Group. In addition to that, Bpost NV is 1.45 times more volatile than Elia Group SANV. It trades about -0.07 of its total potential returns per unit of risk. Elia Group SANV is currently generating about -0.05 per unit of volatility. If you would invest 13,369 in Elia Group SANV on August 30, 2024 and sell it today you would lose (4,609) from holding Elia Group SANV or give up 34.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bpost NV vs. Elia Group SANV
Performance |
| Timeline |
| Bpost NV |
| Elia Group SANV |
Bpost NV and Elia Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bpost NV and Elia Group
The main advantage of trading using opposite Bpost NV and Elia Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bpost NV position performs unexpectedly, Elia Group 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 Elia Group will offset losses from the drop in Elia Group's long position.The idea behind Bpost NV and Elia Group SANV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Elia Group vs. Ackermans Van Haaren | Elia Group vs. Groep Brussel Lambert | Elia Group vs. Sofina Socit Anonyme | Elia Group vs. ageas SANV |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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