Correlation Between Floridienne and Nextensa
Can any of the company-specific risk be diversified away by investing in both Floridienne and Nextensa 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 Nextensa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floridienne and Nextensa NV, you can compare the effects of market volatilities on Floridienne and Nextensa 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 Nextensa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floridienne and Nextensa.
Diversification Opportunities for Floridienne and Nextensa
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Floridienne and Nextensa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV 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 Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Floridienne i.e., Floridienne and Nextensa go up and down completely randomly.
Pair Corralation between Floridienne and Nextensa
Assuming the 90 days trading horizon Floridienne is expected to generate 1.55 times more return on investment than Nextensa. However, Floridienne is 1.55 times more volatile than Nextensa NV. It trades about -0.07 of its potential returns per unit of risk. Nextensa NV is currently generating about -0.12 per unit of risk. If you would invest 67,813 in Floridienne on September 1, 2024 and sell it today you would lose (11,813) from holding Floridienne or give up 17.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.47% |
| Values | Daily Returns |
Floridienne vs. Nextensa NV
Performance |
| Timeline |
| Floridienne |
| Nextensa NV |
Floridienne and Nextensa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floridienne and Nextensa
The main advantage of trading using opposite Floridienne and Nextensa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floridienne position performs unexpectedly, Nextensa 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 Nextensa will offset losses from the drop in Nextensa's long position.| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
| Nextensa vs. Ion Beam Applications | Nextensa vs. Immolease Trust NV | Nextensa vs. Retail Estates | Nextensa vs. Vastned Retail Belgium |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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