Correlation Between Bpost NV and Nextensa
Can any of the company-specific risk be diversified away by investing in both Bpost NV and Nextensa 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 Nextensa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bpost NV and Nextensa NV, you can compare the effects of market volatilities on Bpost NV and Nextensa 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 Nextensa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bpost NV and Nextensa.
Diversification Opportunities for Bpost NV and Nextensa
Very poor diversification
The 3 months correlation between Bpost and Nextensa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bpost NV and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV 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 Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Bpost NV i.e., Bpost NV and Nextensa go up and down completely randomly.
Pair Corralation between Bpost NV and Nextensa
Assuming the 90 days trading horizon Bpost NV is expected to under-perform the Nextensa. In addition to that, Bpost NV is 1.67 times more volatile than Nextensa NV. It trades about -0.22 of its total potential returns per unit of risk. Nextensa NV is currently generating about -0.12 per unit of volatility. If you would invest 4,855 in Nextensa NV on September 1, 2024 and sell it today you would lose (845.00) from holding Nextensa NV or give up 17.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.24% |
| Values | Daily Returns |
Bpost NV vs. Nextensa NV
Performance |
| Timeline |
| Bpost NV |
| Nextensa NV |
Bpost NV and Nextensa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bpost NV and Nextensa
The main advantage of trading using opposite Bpost NV and Nextensa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bpost NV position performs unexpectedly, Nextensa 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 Nextensa will offset losses from the drop in Nextensa's long position.| Bpost NV vs. Proximus NV | Bpost NV vs. ageas SANV | Bpost NV vs. Etablissementen Franz Colruyt | Bpost NV vs. KBC Groep NV |
| Nextensa vs. Ion Beam Applications | Nextensa vs. Immolease Trust NV | Nextensa vs. Retail Estates | Nextensa vs. Vastned Retail Belgium |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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