Correlation Between Brederode and Compagnie
Can any of the company-specific risk be diversified away by investing in both Brederode and Compagnie 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 Brederode and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brederode SA and Compagnie du Bois, you can compare the effects of market volatilities on Brederode and Compagnie 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 Brederode with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brederode and Compagnie.
Diversification Opportunities for Brederode and Compagnie
Weak diversification
The 3 months correlation between Brederode and Compagnie is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brederode SA and Compagnie du Bois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Bois and Brederode 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 Brederode SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Bois has no effect on the direction of Brederode i.e., Brederode and Compagnie go up and down completely randomly.
Pair Corralation between Brederode and Compagnie
Assuming the 90 days trading horizon Brederode SA is expected to generate 0.55 times more return on investment than Compagnie. However, Brederode SA is 1.83 times less risky than Compagnie. It trades about -0.14 of its potential returns per unit of risk. Compagnie du Bois is currently generating about -0.15 per unit of risk. If you would invest 10,920 in Brederode SA on August 26, 2024 and sell it today you would lose (340.00) from holding Brederode SA or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brederode SA vs. Compagnie du Bois
Performance |
| Timeline |
| Brederode SA |
| Compagnie du Bois |
Brederode and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brederode and Compagnie
The main advantage of trading using opposite Brederode and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brederode position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Brederode vs. Groep Brussel Lambert | Brederode vs. Sofina Socit Anonyme | Brederode vs. Ackermans Van Haaren | Brederode vs. KBC Ancora |
| Compagnie vs. Brederode SA | Compagnie vs. GIMV NV | Compagnie vs. Ackermans Van Haaren | Compagnie vs. Groep Brussel Lambert |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |