Correlation Between Brederode and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Brederode and Retail Estates 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 Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brederode SA and Retail Estates , you can compare the effects of market volatilities on Brederode and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brederode and Retail Estates.
Diversification Opportunities for Brederode and Retail Estates
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brederode and Retail is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brederode SA and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of Brederode i.e., Brederode and Retail Estates go up and down completely randomly.
Pair Corralation between Brederode and Retail Estates
Assuming the 90 days trading horizon Brederode is expected to generate 4.17 times less return on investment than Retail Estates. But when comparing it to its historical volatility, Brederode SA is 1.04 times less risky than Retail Estates. It trades about 0.0 of its potential returns per unit of risk. Retail Estates is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,462 in Retail Estates on September 12, 2024 and sell it today you would earn a total of 398.00 from holding Retail Estates or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brederode SA vs. Retail Estates
Performance |
| Timeline |
| Brederode SA |
| Retail Estates |
Brederode and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brederode and Retail Estates
The main advantage of trading using opposite Brederode and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brederode position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Brederode vs. Retail Estates | Brederode vs. Ion Beam Applications | Brederode vs. Onward Medical NV | Brederode vs. Vastned Retail Belgium |
| Retail Estates vs. Cofinimmo SA | Retail Estates vs. Warehouses de Pauw | Retail Estates vs. Montea CVA | Retail Estates vs. Aedifica |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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