Correlation Between Melexis NV and NV Bekaert
Can any of the company-specific risk be diversified away by investing in both Melexis NV 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 Melexis NV and NV Bekaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and NV Bekaert SA, you can compare the effects of market volatilities on Melexis NV 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 Melexis NV with a short position of NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and NV Bekaert.
Diversification Opportunities for Melexis NV and NV Bekaert
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melexis and BEKB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV 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 Melexis NV 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 Melexis NV 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 Melexis NV i.e., Melexis NV and NV Bekaert go up and down completely randomly.
Pair Corralation between Melexis NV and NV Bekaert
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the NV Bekaert. In addition to that, Melexis NV is 1.36 times more volatile than NV Bekaert SA. It trades about -0.11 of its total potential returns per unit of risk. NV Bekaert SA is currently generating about -0.05 per unit of volatility. If you would invest 3,648 in NV Bekaert SA on November 2, 2024 and sell it today you would lose (302.00) from holding NV Bekaert SA or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melexis NV vs. NV Bekaert SA
Performance |
| Timeline |
| Melexis NV |
| NV Bekaert SA |
Melexis NV and NV Bekaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and NV Bekaert
The main advantage of trading using opposite Melexis NV and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV 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.| Melexis NV vs. Ackermans Van Haaren | Melexis NV vs. Sofina Socit Anonyme | Melexis NV vs. ageas SANV | Melexis NV vs. Barco NV |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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