Correlation Between Retail Estates and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Retail Estates and Solvay SA 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 Retail Estates and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates and Solvay SA, you can compare the effects of market volatilities on Retail Estates and Solvay SA 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 Retail Estates with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Solvay SA.
Diversification Opportunities for Retail Estates and Solvay SA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Solvay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Retail Estates 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 Retail Estates are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Retail Estates i.e., Retail Estates and Solvay SA go up and down completely randomly.
Pair Corralation between Retail Estates and Solvay SA
Assuming the 90 days trading horizon Retail Estates is expected to generate 0.46 times more return on investment than Solvay SA. However, Retail Estates is 2.16 times less risky than Solvay SA. It trades about -0.3 of its potential returns per unit of risk. Solvay SA is currently generating about -0.44 per unit of risk. If you would invest 6,350 in Retail Estates on August 28, 2024 and sell it today you would lose (430.00) from holding Retail Estates or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates vs. Solvay SA
Performance |
| Timeline |
| Retail Estates |
| Solvay SA |
Retail Estates and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Solvay SA
The main advantage of trading using opposite Retail Estates and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, Solvay SA 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Retail Estates vs. Cofinimmo SA | Retail Estates vs. Warehouses de Pauw | Retail Estates vs. Montea CVA | Retail Estates vs. Aedifica |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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