Correlation Between Elia Group and Fagron NV
Can any of the company-specific risk be diversified away by investing in both Elia Group and Fagron NV 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 Elia Group and Fagron NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elia Group SANV and Fagron NV, you can compare the effects of market volatilities on Elia Group and Fagron NV 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 Elia Group with a short position of Fagron NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elia Group and Fagron NV.
Diversification Opportunities for Elia Group and Fagron NV
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elia and Fagron is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Elia Group SANV and Fagron NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagron NV and Elia Group 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 Elia Group SANV are associated (or correlated) with Fagron NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagron NV has no effect on the direction of Elia Group i.e., Elia Group and Fagron NV go up and down completely randomly.
Pair Corralation between Elia Group and Fagron NV
Assuming the 90 days trading horizon Elia Group SANV is expected to under-perform the Fagron NV. In addition to that, Elia Group is 1.51 times more volatile than Fagron NV. It trades about -0.02 of its total potential returns per unit of risk. Fagron NV is currently generating about 0.0 per unit of volatility. If you would invest 1,882 in Fagron NV on August 29, 2024 and sell it today you would lose (20.00) from holding Fagron NV or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elia Group SANV vs. Fagron NV
Performance |
| Timeline |
| Elia Group SANV |
| Fagron NV |
Elia Group and Fagron NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elia Group and Fagron NV
The main advantage of trading using opposite Elia Group and Fagron NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elia Group position performs unexpectedly, Fagron NV 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 Fagron NV will offset losses from the drop in Fagron NV's long position.| Elia Group vs. Ackermans Van Haaren | Elia Group vs. Groep Brussel Lambert | Elia Group vs. Sofina Socit Anonyme | Elia Group vs. ageas SANV |
| Fagron NV vs. Tessenderlo | Fagron NV vs. NV Bekaert SA | Fagron NV vs. Ontex Group NV | Fagron NV vs. Argen X |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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