Correlation Between PostNL NV and ForFarmers
Can any of the company-specific risk be diversified away by investing in both PostNL NV and ForFarmers 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 PostNL NV and ForFarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PostNL NV and ForFarmers NV, you can compare the effects of market volatilities on PostNL NV and ForFarmers 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 PostNL NV with a short position of ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of PostNL NV and ForFarmers.
Diversification Opportunities for PostNL NV and ForFarmers
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PostNL and ForFarmers is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PostNL NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and PostNL 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 PostNL NV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of PostNL NV i.e., PostNL NV and ForFarmers go up and down completely randomly.
Pair Corralation between PostNL NV and ForFarmers
Assuming the 90 days trading horizon PostNL NV is expected to under-perform the ForFarmers. In addition to that, PostNL NV is 1.4 times more volatile than ForFarmers NV. It trades about -0.14 of its total potential returns per unit of risk. ForFarmers NV is currently generating about -0.1 per unit of volatility. If you would invest 333.00 in ForFarmers NV on August 31, 2024 and sell it today you would lose (12.00) from holding ForFarmers NV or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PostNL NV vs. ForFarmers NV
Performance |
| Timeline |
| PostNL NV |
| ForFarmers NV |
PostNL NV and ForFarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PostNL NV and ForFarmers
The main advantage of trading using opposite PostNL NV and ForFarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PostNL NV position performs unexpectedly, ForFarmers 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 ForFarmers will offset losses from the drop in ForFarmers' long position.| PostNL NV vs. Koninklijke Ahold Delhaize | PostNL NV vs. Bpost NV | PostNL NV vs. Aegon NV | PostNL NV vs. Koninklijke KPN NV |
| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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