Correlation Between Jensen and NV Bekaert
Can any of the company-specific risk be diversified away by investing in both Jensen and NV Bekaert 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 Jensen and NV Bekaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jensen Group and NV Bekaert SA, you can compare the effects of market volatilities on Jensen and NV Bekaert 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 Jensen with a short position of NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen and NV Bekaert.
Diversification Opportunities for Jensen and NV Bekaert
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jensen and BEKB is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Jensen 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 Jensen Group are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Jensen i.e., Jensen and NV Bekaert go up and down completely randomly.
Pair Corralation between Jensen and NV Bekaert
Assuming the 90 days trading horizon Jensen Group is expected to generate 1.31 times more return on investment than NV Bekaert. However, Jensen is 1.31 times more volatile than NV Bekaert SA. It trades about 0.0 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.13 per unit of risk. If you would invest 4,050 in Jensen Group on August 26, 2024 and sell it today you would lose (10.00) from holding Jensen Group or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jensen Group vs. NV Bekaert SA
Performance |
| Timeline |
| Jensen Group |
| NV Bekaert SA |
Jensen and NV Bekaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen and NV Bekaert
The main advantage of trading using opposite Jensen and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen position performs unexpectedly, NV Bekaert 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 NV Bekaert will offset losses from the drop in NV Bekaert's long position.The idea behind Jensen Group and NV Bekaert SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NV Bekaert vs. Solvay SA | NV Bekaert vs. Ackermans Van Haaren | NV Bekaert vs. Barco NV | NV Bekaert vs. Etablissementen Franz Colruyt |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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