Correlation Between Melexis NV and GIMV NV
Can any of the company-specific risk be diversified away by investing in both Melexis NV and GIMV NV 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 GIMV NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and GIMV NV, you can compare the effects of market volatilities on Melexis NV and GIMV NV 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 GIMV NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and GIMV NV.
Diversification Opportunities for Melexis NV and GIMV NV
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melexis and GIMV is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV NV 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 GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of Melexis NV i.e., Melexis NV and GIMV NV go up and down completely randomly.
Pair Corralation between Melexis NV and GIMV NV
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the GIMV NV. In addition to that, Melexis NV is 1.72 times more volatile than GIMV NV. It trades about -0.3 of its total potential returns per unit of risk. GIMV NV is currently generating about 0.08 per unit of volatility. If you would invest 3,900 in GIMV NV on August 29, 2024 and sell it today you would earn a total of 120.00 from holding GIMV NV or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melexis NV vs. GIMV NV
Performance |
| Timeline |
| Melexis NV |
| GIMV NV |
Melexis NV and GIMV NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and GIMV NV
The main advantage of trading using opposite Melexis NV and GIMV NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, GIMV NV 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 GIMV NV will offset losses from the drop in GIMV NV'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 |
| GIMV NV vs. Groep Brussel Lambert | GIMV NV vs. Ackermans Van Haaren | GIMV NV vs. Sofina Socit Anonyme | GIMV NV vs. Brederode 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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