Correlation Between Melexis NV and Wereldhav
Can any of the company-specific risk be diversified away by investing in both Melexis NV and Wereldhav 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 Wereldhav into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Wereldhav B Sicafi, you can compare the effects of market volatilities on Melexis NV and Wereldhav 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 Wereldhav. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Wereldhav.
Diversification Opportunities for Melexis NV and Wereldhav
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melexis and Wereldhav is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Wereldhav B Sicafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wereldhav B Sicafi 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 Wereldhav. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wereldhav B Sicafi has no effect on the direction of Melexis NV i.e., Melexis NV and Wereldhav go up and down completely randomly.
Pair Corralation between Melexis NV and Wereldhav
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the Wereldhav. In addition to that, Melexis NV is 2.15 times more volatile than Wereldhav B Sicafi. It trades about -0.12 of its total potential returns per unit of risk. Wereldhav B Sicafi is currently generating about -0.09 per unit of volatility. If you would invest 4,690 in Wereldhav B Sicafi on September 3, 2024 and sell it today you would lose (80.00) from holding Wereldhav B Sicafi or give up 1.71% 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. Wereldhav B Sicafi
Performance |
| Timeline |
| Melexis NV |
| Wereldhav B Sicafi |
Melexis NV and Wereldhav Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and Wereldhav
The main advantage of trading using opposite Melexis NV and Wereldhav positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, Wereldhav 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 Wereldhav will offset losses from the drop in Wereldhav'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 |
| Wereldhav vs. Cofinimmo SA | Wereldhav vs. Retail Estates | Wereldhav vs. Warehouses de Pauw | Wereldhav vs. Montea CVA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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