Correlation Between Sofina Socit and Nextensa
Can any of the company-specific risk be diversified away by investing in both Sofina Socit and Nextensa 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 Sofina Socit and Nextensa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofina Socit Anonyme and Nextensa NV, you can compare the effects of market volatilities on Sofina Socit and Nextensa 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 Sofina Socit with a short position of Nextensa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and Nextensa.
Diversification Opportunities for Sofina Socit and Nextensa
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sofina and Nextensa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV and Sofina Socit 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 Sofina Socit Anonyme are associated (or correlated) with Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Sofina Socit i.e., Sofina Socit and Nextensa go up and down completely randomly.
Pair Corralation between Sofina Socit and Nextensa
Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 1.4 times more return on investment than Nextensa. However, Sofina Socit is 1.4 times more volatile than Nextensa NV. It trades about 0.01 of its potential returns per unit of risk. Nextensa NV is currently generating about -0.12 per unit of risk. If you would invest 22,080 in Sofina Socit Anonyme on September 1, 2024 and sell it today you would lose (120.00) from holding Sofina Socit Anonyme or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Sofina Socit Anonyme vs. Nextensa NV
Performance |
| Timeline |
| Sofina Socit Anonyme |
| Nextensa NV |
Sofina Socit and Nextensa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofina Socit and Nextensa
The main advantage of trading using opposite Sofina Socit and Nextensa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofina Socit position performs unexpectedly, Nextensa 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 Nextensa will offset losses from the drop in Nextensa's long position.| Sofina Socit vs. Vastned Retail Belgium | Sofina Socit vs. Shurgard Self Storage | Sofina Socit vs. EVS Broadcast Equipment |
| Nextensa vs. Ion Beam Applications | Nextensa vs. Immolease Trust NV | Nextensa vs. Retail Estates | Nextensa vs. Vastned Retail Belgium |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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