Correlation Between ForFarmers and NSI NV
Can any of the company-specific risk be diversified away by investing in both ForFarmers and NSI 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 ForFarmers and NSI NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ForFarmers NV and NSI NV, you can compare the effects of market volatilities on ForFarmers and NSI 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 ForFarmers with a short position of NSI NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and NSI NV.
Diversification Opportunities for ForFarmers and NSI NV
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ForFarmers and NSI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and NSI NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSI NV and ForFarmers 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 ForFarmers NV are associated (or correlated) with NSI NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSI NV has no effect on the direction of ForFarmers i.e., ForFarmers and NSI NV go up and down completely randomly.
Pair Corralation between ForFarmers and NSI NV
Assuming the 90 days trading horizon ForFarmers NV is expected to generate 2.6 times more return on investment than NSI NV. However, ForFarmers is 2.6 times more volatile than NSI NV. It trades about 0.02 of its potential returns per unit of risk. NSI NV is currently generating about -0.25 per unit of risk. If you would invest 328.00 in ForFarmers NV on August 28, 2024 and sell it today you would earn a total of 1.00 from holding ForFarmers NV or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ForFarmers NV vs. NSI NV
Performance |
| Timeline |
| ForFarmers NV |
| NSI NV |
ForFarmers and NSI NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and NSI NV
The main advantage of trading using opposite ForFarmers and NSI NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, NSI 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 NSI NV will offset losses from the drop in NSI NV's long position.| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
| NSI NV vs. Vastned Retail NV | NSI NV vs. Eurocommercial Properties NV | NSI NV vs. Wereldhave NV | NSI NV vs. Brunel International NV |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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