Correlation Between Etablissementen Franz and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Etablissementen Franz and Solvay 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 Etablissementen Franz and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etablissementen Franz Colruyt and Solvay SA, you can compare the effects of market volatilities on Etablissementen Franz and Solvay 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 Etablissementen Franz with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etablissementen Franz and Solvay SA.
Diversification Opportunities for Etablissementen Franz and Solvay SA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Etablissementen and Solvay is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Etablissementen Franz Colruyt and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Etablissementen Franz 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 Etablissementen Franz Colruyt are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Etablissementen Franz i.e., Etablissementen Franz and Solvay SA go up and down completely randomly.
Pair Corralation between Etablissementen Franz and Solvay SA
Assuming the 90 days trading horizon Etablissementen Franz Colruyt is expected to under-perform the Solvay SA. In addition to that, Etablissementen Franz is 1.21 times more volatile than Solvay SA. It trades about -0.28 of its total potential returns per unit of risk. Solvay SA is currently generating about 0.0 per unit of volatility. If you would invest 2,966 in Solvay SA on October 26, 2024 and sell it today you would lose (19.00) from holding Solvay SA or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etablissementen Franz Colruyt vs. Solvay SA
Performance |
| Timeline |
| Etablissementen Franz |
| Solvay SA |
Etablissementen Franz and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etablissementen Franz and Solvay SA
The main advantage of trading using opposite Etablissementen Franz and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etablissementen Franz position performs unexpectedly, Solvay 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Etablissementen Franz vs. KBC Groep NV | Etablissementen Franz vs. Proximus NV | Etablissementen Franz vs. ageas SANV | Etablissementen Franz vs. Solvay SA |
| Solvay SA vs. Vastned Retail Belgium | Solvay SA vs. Keyware Technologies NV | Solvay SA vs. Home Invest Belgium | Solvay SA vs. EVS Broadcast Equipment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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