Correlation Between Bpost NV and UCB SA
Can any of the company-specific risk be diversified away by investing in both Bpost NV and UCB SA 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 UCB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bpost NV and UCB SA, you can compare the effects of market volatilities on Bpost NV and UCB SA 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 UCB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bpost NV and UCB SA.
Diversification Opportunities for Bpost NV and UCB SA
Pay attention - limited upside
The 3 months correlation between Bpost and UCB is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bpost NV and UCB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCB SA 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 UCB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UCB SA has no effect on the direction of Bpost NV i.e., Bpost NV and UCB SA go up and down completely randomly.
Pair Corralation between Bpost NV and UCB SA
Assuming the 90 days trading horizon Bpost NV is expected to under-perform the UCB SA. In addition to that, Bpost NV is 1.25 times more volatile than UCB SA. It trades about -0.13 of its total potential returns per unit of risk. UCB SA is currently generating about 0.33 per unit of volatility. If you would invest 16,600 in UCB SA on September 18, 2024 and sell it today you would earn a total of 1,950 from holding UCB SA or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bpost NV vs. UCB SA
Performance |
| Timeline |
| Bpost NV |
| UCB SA |
Bpost NV and UCB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bpost NV and UCB SA
The main advantage of trading using opposite Bpost NV and UCB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bpost NV position performs unexpectedly, UCB SA 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 UCB SA will offset losses from the drop in UCB SA'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 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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