Correlation Between Brederode and Groep Brussel
Can any of the company-specific risk be diversified away by investing in both Brederode and Groep Brussel 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 Groep Brussel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brederode SA and Groep Brussel Lambert, you can compare the effects of market volatilities on Brederode and Groep Brussel 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 Groep Brussel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brederode and Groep Brussel.
Diversification Opportunities for Brederode and Groep Brussel
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brederode and Groep is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brederode SA and Groep Brussel Lambert in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groep Brussel Lambert 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 Groep Brussel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groep Brussel Lambert has no effect on the direction of Brederode i.e., Brederode and Groep Brussel go up and down completely randomly.
Pair Corralation between Brederode and Groep Brussel
Assuming the 90 days trading horizon Brederode SA is expected to generate 1.5 times more return on investment than Groep Brussel. However, Brederode is 1.5 times more volatile than Groep Brussel Lambert. It trades about 0.24 of its potential returns per unit of risk. Groep Brussel Lambert is currently generating about 0.06 per unit of risk. If you would invest 10,580 in Brederode SA on October 23, 2024 and sell it today you would earn a total of 980.00 from holding Brederode SA or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brederode SA vs. Groep Brussel Lambert
Performance |
| Timeline |
| Brederode SA |
| Groep Brussel Lambert |
Brederode and Groep Brussel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brederode and Groep Brussel
The main advantage of trading using opposite Brederode and Groep Brussel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brederode position performs unexpectedly, Groep Brussel 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 Groep Brussel will offset losses from the drop in Groep Brussel's long position.| Brederode vs. Keyware Technologies NV | Brederode vs. Home Invest Belgium | Brederode vs. Ion Beam Applications | Brederode vs. Retail Estates |
| Groep Brussel vs. Ackermans Van Haaren | Groep Brussel vs. Sofina Socit Anonyme | Groep Brussel vs. ageas SANV | Groep Brussel vs. Solvay SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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