Correlation Between Elia Group and Ontex Group
Can any of the company-specific risk be diversified away by investing in both Elia Group and Ontex Group 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 Ontex Group 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 Ontex Group NV, you can compare the effects of market volatilities on Elia Group and Ontex Group 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 Ontex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elia Group and Ontex Group.
Diversification Opportunities for Elia Group and Ontex Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elia and Ontex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Elia Group SANV and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group 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 Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of Elia Group i.e., Elia Group and Ontex Group go up and down completely randomly.
Pair Corralation between Elia Group and Ontex Group
Assuming the 90 days trading horizon Elia Group SANV is expected to under-perform the Ontex Group. In addition to that, Elia Group is 1.73 times more volatile than Ontex Group NV. It trades about -0.07 of its total potential returns per unit of risk. Ontex Group NV is currently generating about 0.36 per unit of volatility. If you would invest 735.00 in Ontex Group NV on September 13, 2024 and sell it today you would earn a total of 65.00 from holding Ontex Group NV or generate 8.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elia Group SANV vs. Ontex Group NV
Performance |
| Timeline |
| Elia Group SANV |
| Ontex Group NV |
Elia Group and Ontex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elia Group and Ontex Group
The main advantage of trading using opposite Elia Group and Ontex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elia Group position performs unexpectedly, Ontex Group 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 Ontex Group will offset losses from the drop in Ontex Group'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 |
| Ontex Group vs. Bpost NV | Ontex Group vs. Barco NV | Ontex Group vs. Biocartis Group NV | Ontex Group vs. ageas SANV |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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