Correlation Between Relx PLC and Alfen Beheer
Can any of the company-specific risk be diversified away by investing in both Relx PLC and Alfen Beheer 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 Relx PLC and Alfen Beheer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Relx PLC and Alfen Beheer BV, you can compare the effects of market volatilities on Relx PLC and Alfen Beheer 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 Relx PLC with a short position of Alfen Beheer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Relx PLC and Alfen Beheer.
Diversification Opportunities for Relx PLC and Alfen Beheer
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Relx and Alfen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC and Alfen Beheer BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen Beheer BV and Relx PLC 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 Relx PLC are associated (or correlated) with Alfen Beheer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen Beheer BV has no effect on the direction of Relx PLC i.e., Relx PLC and Alfen Beheer go up and down completely randomly.
Pair Corralation between Relx PLC and Alfen Beheer
Assuming the 90 days trading horizon Relx PLC is expected to generate 0.2 times more return on investment than Alfen Beheer. However, Relx PLC is 4.9 times less risky than Alfen Beheer. It trades about 0.08 of its potential returns per unit of risk. Alfen Beheer BV is currently generating about -0.13 per unit of risk. If you would invest 4,002 in Relx PLC on August 31, 2024 and sell it today you would earn a total of 456.00 from holding Relx PLC or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Relx PLC vs. Alfen Beheer BV
Performance |
| Timeline |
| Relx PLC |
| Alfen Beheer BV |
Relx PLC and Alfen Beheer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Relx PLC and Alfen Beheer
The main advantage of trading using opposite Relx PLC and Alfen Beheer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relx PLC position performs unexpectedly, Alfen Beheer 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 Alfen Beheer will offset losses from the drop in Alfen Beheer's long position.The idea behind Relx PLC and Alfen Beheer BV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Alfen Beheer vs. Fastned BV | Alfen Beheer vs. Basic Fit NV | Alfen Beheer vs. BE Semiconductor Industries | Alfen Beheer vs. ASM International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |