Correlation Between Floridienne and Brederode
Can any of the company-specific risk be diversified away by investing in both Floridienne and Brederode 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 Floridienne and Brederode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floridienne and Brederode SA, you can compare the effects of market volatilities on Floridienne and Brederode 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 Floridienne with a short position of Brederode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floridienne and Brederode.
Diversification Opportunities for Floridienne and Brederode
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floridienne and Brederode is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and Floridienne 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 Floridienne are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Floridienne i.e., Floridienne and Brederode go up and down completely randomly.
Pair Corralation between Floridienne and Brederode
Assuming the 90 days trading horizon Floridienne is expected to under-perform the Brederode. In addition to that, Floridienne is 1.99 times more volatile than Brederode SA. It trades about -0.03 of its total potential returns per unit of risk. Brederode SA is currently generating about 0.04 per unit of volatility. If you would invest 9,501 in Brederode SA on August 27, 2024 and sell it today you would earn a total of 1,079 from holding Brederode SA or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.68% |
| Values | Daily Returns |
Floridienne vs. Brederode SA
Performance |
| Timeline |
| Floridienne |
| Brederode SA |
Floridienne and Brederode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floridienne and Brederode
The main advantage of trading using opposite Floridienne and Brederode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floridienne position performs unexpectedly, Brederode 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 Brederode will offset losses from the drop in Brederode's long position.| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
| Brederode vs. Groep Brussel Lambert | Brederode vs. Sofina Socit Anonyme | Brederode vs. Ackermans Van Haaren | Brederode vs. KBC Ancora |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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