Correlation Between Koninklijke Philips and NN Group
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and NN Group 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 Koninklijke Philips and NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and NN Group NV, you can compare the effects of market volatilities on Koninklijke Philips and NN Group 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 Koninklijke Philips with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and NN Group.
Diversification Opportunities for Koninklijke Philips and NN Group
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Koninklijke and NN Group is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and NN Group go up and down completely randomly.
Pair Corralation between Koninklijke Philips and NN Group
Assuming the 90 days trading horizon Koninklijke Philips NV is expected to under-perform the NN Group. In addition to that, Koninklijke Philips is 4.21 times more volatile than NN Group NV. It trades about -0.17 of its total potential returns per unit of risk. NN Group NV is currently generating about -0.1 per unit of volatility. If you would invest 4,583 in NN Group NV on August 24, 2024 and sell it today you would lose (99.00) from holding NN Group NV or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. NN Group NV
Performance |
| Timeline |
| Koninklijke Philips |
| NN Group NV |
Koninklijke Philips and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and NN Group
The main advantage of trading using opposite Koninklijke Philips and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Koninklijke Philips vs. Unilever PLC | Koninklijke Philips vs. ING Groep NV | Koninklijke Philips vs. Aegon NV | Koninklijke Philips vs. Koninklijke Ahold Delhaize |
| NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. BE Semiconductor Industries | NN Group vs. Aegon NV | NN Group vs. Aalberts Industries NV |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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