Correlation Between ForFarmers and PostNL NV
Can any of the company-specific risk be diversified away by investing in both ForFarmers and PostNL 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 PostNL 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 PostNL NV, you can compare the effects of market volatilities on ForFarmers and PostNL 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 PostNL NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and PostNL NV.
Diversification Opportunities for ForFarmers and PostNL NV
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ForFarmers and PostNL is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL 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 PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of ForFarmers i.e., ForFarmers and PostNL NV go up and down completely randomly.
Pair Corralation between ForFarmers and PostNL NV
Assuming the 90 days trading horizon ForFarmers NV is expected to generate 0.77 times more return on investment than PostNL NV. However, ForFarmers NV is 1.3 times less risky than PostNL NV. It trades about 0.02 of its potential returns per unit of risk. PostNL NV is currently generating about -0.23 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ForFarmers NV vs. PostNL NV
Performance |
| Timeline |
| ForFarmers NV |
| PostNL NV |
ForFarmers and PostNL NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and PostNL NV
The main advantage of trading using opposite ForFarmers and PostNL NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, PostNL 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 PostNL NV will offset losses from the drop in PostNL NV's long position.| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
| PostNL NV vs. Koninklijke Ahold Delhaize | PostNL NV vs. Bpost NV | PostNL NV vs. Aegon NV | PostNL NV vs. Koninklijke KPN 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |