Correlation Between Cofinimmo and Warehouses
Can any of the company-specific risk be diversified away by investing in both Cofinimmo and Warehouses 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 Cofinimmo and Warehouses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cofinimmo SA and Warehouses de Pauw, you can compare the effects of market volatilities on Cofinimmo and Warehouses 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 Cofinimmo with a short position of Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cofinimmo and Warehouses.
Diversification Opportunities for Cofinimmo and Warehouses
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cofinimmo and Warehouses is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cofinimmo SA and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw and Cofinimmo 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 Cofinimmo SA are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Cofinimmo i.e., Cofinimmo and Warehouses go up and down completely randomly.
Pair Corralation between Cofinimmo and Warehouses
Assuming the 90 days trading horizon Cofinimmo SA is expected to under-perform the Warehouses. But the stock apears to be less risky and, when comparing its historical volatility, Cofinimmo SA is 1.13 times less risky than Warehouses. The stock trades about -0.47 of its potential returns per unit of risk. The Warehouses de Pauw is currently generating about -0.37 of returns per unit of risk over similar time horizon. If you would invest 2,220 in Warehouses de Pauw on August 24, 2024 and sell it today you would lose (208.00) from holding Warehouses de Pauw or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cofinimmo SA vs. Warehouses de Pauw
Performance |
| Timeline |
| Cofinimmo SA |
| Warehouses de Pauw |
Cofinimmo and Warehouses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cofinimmo and Warehouses
The main advantage of trading using opposite Cofinimmo and Warehouses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cofinimmo position performs unexpectedly, Warehouses 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 Warehouses will offset losses from the drop in Warehouses' long position.The idea behind Cofinimmo SA and Warehouses de Pauw pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Warehouses vs. Aedifica | Warehouses vs. Cofinimmo SA | Warehouses vs. VGP NV | Warehouses vs. Sofina Socit Anonyme |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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