Correlation Between Deceuninck and Fountain
Can any of the company-specific risk be diversified away by investing in both Deceuninck and Fountain 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 Deceuninck and Fountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deceuninck and Fountain, you can compare the effects of market volatilities on Deceuninck and Fountain 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 Deceuninck with a short position of Fountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deceuninck and Fountain.
Diversification Opportunities for Deceuninck and Fountain
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deceuninck and Fountain is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Deceuninck and Fountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountain and Deceuninck 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 Deceuninck are associated (or correlated) with Fountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountain has no effect on the direction of Deceuninck i.e., Deceuninck and Fountain go up and down completely randomly.
Pair Corralation between Deceuninck and Fountain
Assuming the 90 days trading horizon Deceuninck is expected to under-perform the Fountain. But the stock apears to be less risky and, when comparing its historical volatility, Deceuninck is 2.37 times less risky than Fountain. The stock trades about -0.04 of its potential returns per unit of risk. The Fountain is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Fountain on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Fountain or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deceuninck vs. Fountain
Performance |
| Timeline |
| Deceuninck |
| Fountain |
Deceuninck and Fountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deceuninck and Fountain
The main advantage of trading using opposite Deceuninck and Fountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deceuninck position performs unexpectedly, Fountain 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 Fountain will offset losses from the drop in Fountain's long position.| Deceuninck vs. NV Bekaert SA | Deceuninck vs. Tessenderlo | Deceuninck vs. Barco NV | Deceuninck 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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