Correlation Between Elia Group and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Elia Group and Retail Estates 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 Retail Estates 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 Retail Estates , you can compare the effects of market volatilities on Elia Group and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elia Group and Retail Estates.
Diversification Opportunities for Elia Group and Retail Estates
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Elia and Retail is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Elia Group SANV and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of Elia Group i.e., Elia Group and Retail Estates go up and down completely randomly.
Pair Corralation between Elia Group and Retail Estates
Assuming the 90 days trading horizon Elia Group SANV is expected to generate 1.93 times more return on investment than Retail Estates. However, Elia Group is 1.93 times more volatile than Retail Estates . It trades about -0.13 of its potential returns per unit of risk. Retail Estates is currently generating about -0.33 per unit of risk. If you would invest 9,325 in Elia Group SANV on August 29, 2024 and sell it today you would lose (600.00) from holding Elia Group SANV or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elia Group SANV vs. Retail Estates
Performance |
| Timeline |
| Elia Group SANV |
| Retail Estates |
Elia Group and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elia Group and Retail Estates
The main advantage of trading using opposite Elia Group and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elia Group position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' 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 |
| Retail Estates vs. Cofinimmo SA | Retail Estates vs. Warehouses de Pauw | Retail Estates vs. Montea CVA | Retail Estates vs. Aedifica |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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