Correlation Between Square and Adyen NV
Can any of the company-specific risk be diversified away by investing in both Square and Adyen NV 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 Square and Adyen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Square Inc and Adyen NV, you can compare the effects of market volatilities on Square and Adyen NV 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 Square with a short position of Adyen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Square and Adyen NV.
Diversification Opportunities for Square and Adyen NV
Significant diversification
The 3 months correlation between Square and Adyen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Square Inc and Adyen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adyen NV and Square 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 Square Inc are associated (or correlated) with Adyen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adyen NV has no effect on the direction of Square i.e., Square and Adyen NV go up and down completely randomly.
Pair Corralation between Square and Adyen NV
Assuming the 90 days horizon Square Inc is expected to generate 0.9 times more return on investment than Adyen NV. However, Square Inc is 1.11 times less risky than Adyen NV. It trades about 0.04 of its potential returns per unit of risk. Adyen NV is currently generating about 0.03 per unit of risk. If you would invest 5,600 in Square Inc on September 14, 2024 and sell it today you would earn a total of 3,390 from holding Square Inc or generate 60.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Square Inc vs. Adyen NV
Performance |
| Timeline |
| Square Inc |
| Adyen NV |
Square and Adyen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Square and Adyen NV
The main advantage of trading using opposite Square and Adyen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Square position performs unexpectedly, Adyen NV 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 Adyen NV will offset losses from the drop in Adyen NV's long position.| Square vs. Adyen NV | Square vs. Superior Plus Corp | Square vs. SIVERS SEMICONDUCTORS AB | Square vs. Norsk Hydro ASA |
| Adyen NV vs. Focus Home Interactive | Adyen NV vs. Haier Smart Home | Adyen NV vs. LGI Homes | Adyen NV vs. MI Homes |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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