Correlation Between Solvay SA and Vastned Retail
Can any of the company-specific risk be diversified away by investing in both Solvay SA and Vastned Retail 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 Solvay SA and Vastned Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and Vastned Retail Belgium, you can compare the effects of market volatilities on Solvay SA and Vastned Retail 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 Solvay SA with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Vastned Retail.
Diversification Opportunities for Solvay SA and Vastned Retail
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solvay and Vastned is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and Vastned Retail Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail Belgium and Solvay SA 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 Solvay SA are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail Belgium has no effect on the direction of Solvay SA i.e., Solvay SA and Vastned Retail go up and down completely randomly.
Pair Corralation between Solvay SA and Vastned Retail
Assuming the 90 days trading horizon Solvay SA is expected to generate 1.2 times more return on investment than Vastned Retail. However, Solvay SA is 1.2 times more volatile than Vastned Retail Belgium. It trades about -0.04 of its potential returns per unit of risk. Vastned Retail Belgium is currently generating about -0.27 per unit of risk. If you would invest 2,994 in Solvay SA on November 4, 2024 and sell it today you would lose (40.00) from holding Solvay SA or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA vs. Vastned Retail Belgium
Performance |
| Timeline |
| Solvay SA |
| Vastned Retail Belgium |
Solvay SA and Vastned Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Vastned Retail
The main advantage of trading using opposite Solvay SA and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail's long position.The idea behind Solvay SA and Vastned Retail Belgium 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.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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