Correlation Between Stem and Arcadis NV
Can any of the company-specific risk be diversified away by investing in both Stem and Arcadis 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 Stem and Arcadis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Inc and Arcadis NV, you can compare the effects of market volatilities on Stem and Arcadis 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 Stem with a short position of Arcadis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and Arcadis NV.
Diversification Opportunities for Stem and Arcadis NV
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stem and Arcadis is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV and Stem 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 Stem Inc are associated (or correlated) with Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of Stem i.e., Stem and Arcadis NV go up and down completely randomly.
Pair Corralation between Stem and Arcadis NV
Given the investment horizon of 90 days Stem Inc is expected to under-perform the Arcadis NV. In addition to that, Stem is 2.85 times more volatile than Arcadis NV. It trades about -0.03 of its total potential returns per unit of risk. Arcadis NV is currently generating about 0.04 per unit of volatility. If you would invest 4,492 in Arcadis NV on November 2, 2024 and sell it today you would earn a total of 1,343 from holding Arcadis NV or generate 29.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.94% |
| Values | Daily Returns |
Stem Inc vs. Arcadis NV
Performance |
| Timeline |
| Stem Inc |
| Arcadis NV |
Stem and Arcadis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem and Arcadis NV
The main advantage of trading using opposite Stem and Arcadis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem position performs unexpectedly, Arcadis 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 Arcadis NV will offset losses from the drop in Arcadis NV's long position.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies Class |
| Arcadis NV vs. Arcadis NV | Arcadis NV vs. BE Semiconductor Industries | Arcadis NV vs. Arkema SA ADR | Arcadis NV vs. Assa Abloy AB |
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.
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