Correlation Between Randstad and NN Group
Can any of the company-specific risk be diversified away by investing in both Randstad 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 Randstad and NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Randstad NV and NN Group NV, you can compare the effects of market volatilities on Randstad 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 Randstad with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Randstad and NN Group.
Diversification Opportunities for Randstad and NN Group
Average diversification
The 3 months correlation between Randstad and NN Group is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Randstad 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 Randstad 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 Randstad 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 Randstad i.e., Randstad and NN Group go up and down completely randomly.
Pair Corralation between Randstad and NN Group
Assuming the 90 days trading horizon Randstad NV is expected to under-perform the NN Group. But the stock apears to be less risky and, when comparing its historical volatility, Randstad NV is 1.16 times less risky than NN Group. The stock trades about -0.01 of its potential returns per unit of risk. The NN Group NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,062 in NN Group NV on August 28, 2024 and sell it today you would earn a total of 1,419 from holding NN Group NV or generate 46.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Randstad NV vs. NN Group NV
Performance |
| Timeline |
| Randstad NV |
| NN Group NV |
Randstad and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Randstad and NN Group
The main advantage of trading using opposite Randstad and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad 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.| Randstad vs. Akzo Nobel NV | Randstad vs. Koninklijke KPN NV | Randstad vs. Aegon NV | Randstad vs. Wolters Kluwer NV |
| NN Group vs. ASR Nederland NV | NN Group vs. Aegon NV | NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. ABN Amro Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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