Correlation Between Proximus and Tessenderlo
Can any of the company-specific risk be diversified away by investing in both Proximus and Tessenderlo 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 Proximus and Tessenderlo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proximus NV and Tessenderlo, you can compare the effects of market volatilities on Proximus and Tessenderlo 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 Proximus with a short position of Tessenderlo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proximus and Tessenderlo.
Diversification Opportunities for Proximus and Tessenderlo
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Proximus and Tessenderlo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV and Tessenderlo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tessenderlo and Proximus 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 Proximus NV are associated (or correlated) with Tessenderlo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tessenderlo has no effect on the direction of Proximus i.e., Proximus and Tessenderlo go up and down completely randomly.
Pair Corralation between Proximus and Tessenderlo
Assuming the 90 days trading horizon Proximus NV is expected to under-perform the Tessenderlo. In addition to that, Proximus is 1.96 times more volatile than Tessenderlo. It trades about -0.46 of its total potential returns per unit of risk. Tessenderlo is currently generating about -0.37 per unit of volatility. If you would invest 2,340 in Tessenderlo on September 19, 2024 and sell it today you would lose (220.00) from holding Tessenderlo or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proximus NV vs. Tessenderlo
Performance |
| Timeline |
| Proximus NV |
| Tessenderlo |
Proximus and Tessenderlo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proximus and Tessenderlo
The main advantage of trading using opposite Proximus and Tessenderlo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proximus position performs unexpectedly, Tessenderlo 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 Tessenderlo will offset losses from the drop in Tessenderlo's long position.| Proximus vs. Bpost NV | Proximus vs. Etablissementen Franz Colruyt | Proximus vs. ageas SANV | Proximus vs. KBC Groep NV |
| Tessenderlo vs. Ackermans Van Haaren | Tessenderlo vs. NV Bekaert SA | Tessenderlo vs. Groep Brussel Lambert | Tessenderlo vs. Tubize Fin |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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