Correlation Between NN Group and Aalberts Industries
Can any of the company-specific risk be diversified away by investing in both NN Group and Aalberts Industries 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 NN Group and Aalberts Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Group NV and Aalberts Industries NV, you can compare the effects of market volatilities on NN Group and Aalberts Industries 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 NN Group with a short position of Aalberts Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN Group and Aalberts Industries.
Diversification Opportunities for NN Group and Aalberts Industries
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NN Group and Aalberts is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries and NN Group 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 NN Group NV are associated (or correlated) with Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of NN Group i.e., NN Group and Aalberts Industries go up and down completely randomly.
Pair Corralation between NN Group and Aalberts Industries
Assuming the 90 days horizon NN Group NV is expected to under-perform the Aalberts Industries. But the stock apears to be less risky and, when comparing its historical volatility, NN Group NV is 2.01 times less risky than Aalberts Industries. The stock trades about -0.17 of its potential returns per unit of risk. The Aalberts Industries NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,396 in Aalberts Industries NV on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Aalberts Industries NV or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NN Group NV vs. Aalberts Industries NV
Performance |
| Timeline |
| NN Group NV |
| Aalberts Industries |
NN Group and Aalberts Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN Group and Aalberts Industries
The main advantage of trading using opposite NN Group and Aalberts Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN Group position performs unexpectedly, Aalberts Industries 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 Aalberts Industries will offset losses from the drop in Aalberts Industries' long position.| NN Group vs. ASR Nederland NV | NN Group vs. Aegon NV | NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. ABN Amro Group |
| Aalberts Industries vs. Pharming Group NV | Aalberts Industries vs. AMG Advanced Metallurgical | Aalberts Industries vs. BE Semiconductor Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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