Correlation Between Groep Brussel and Texaf SA
Can any of the company-specific risk be diversified away by investing in both Groep Brussel and Texaf SA 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 Groep Brussel and Texaf SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groep Brussel Lambert and Texaf SA, you can compare the effects of market volatilities on Groep Brussel and Texaf SA 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 Groep Brussel with a short position of Texaf SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groep Brussel and Texaf SA.
Diversification Opportunities for Groep Brussel and Texaf SA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groep and Texaf is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and Texaf SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texaf SA and Groep Brussel 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 Groep Brussel Lambert are associated (or correlated) with Texaf SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texaf SA has no effect on the direction of Groep Brussel i.e., Groep Brussel and Texaf SA go up and down completely randomly.
Pair Corralation between Groep Brussel and Texaf SA
Assuming the 90 days trading horizon Groep Brussel Lambert is expected to under-perform the Texaf SA. But the stock apears to be less risky and, when comparing its historical volatility, Groep Brussel Lambert is 1.3 times less risky than Texaf SA. The stock trades about -0.01 of its potential returns per unit of risk. The Texaf SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,142 in Texaf SA on September 3, 2024 and sell it today you would earn a total of 298.00 from holding Texaf SA or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groep Brussel Lambert vs. Texaf SA
Performance |
| Timeline |
| Groep Brussel Lambert |
| Texaf SA |
Groep Brussel and Texaf SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groep Brussel and Texaf SA
The main advantage of trading using opposite Groep Brussel and Texaf SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groep Brussel position performs unexpectedly, Texaf SA 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 Texaf SA will offset losses from the drop in Texaf SA's long position.| Groep Brussel vs. Ackermans Van Haaren | Groep Brussel vs. Sofina Socit Anonyme | Groep Brussel vs. ageas SANV | Groep Brussel vs. Solvay SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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