Correlation Between Umicore SA and Ageas SANV
Can any of the company-specific risk be diversified away by investing in both Umicore SA and Ageas SANV 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 Umicore SA and Ageas SANV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Umicore SA and ageas SANV, you can compare the effects of market volatilities on Umicore SA and Ageas SANV 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 Umicore SA with a short position of Ageas SANV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Umicore SA and Ageas SANV.
Diversification Opportunities for Umicore SA and Ageas SANV
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Umicore and Ageas is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Umicore SA and ageas SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ageas SANV and Umicore 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 Umicore SA are associated (or correlated) with Ageas SANV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ageas SANV has no effect on the direction of Umicore SA i.e., Umicore SA and Ageas SANV go up and down completely randomly.
Pair Corralation between Umicore SA and Ageas SANV
Assuming the 90 days trading horizon Umicore SA is expected to under-perform the Ageas SANV. In addition to that, Umicore SA is 3.01 times more volatile than ageas SANV. It trades about -0.12 of its total potential returns per unit of risk. ageas SANV is currently generating about 0.01 per unit of volatility. If you would invest 4,870 in ageas SANV on August 28, 2024 and sell it today you would earn a total of 4.00 from holding ageas SANV or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Umicore SA vs. ageas SANV
Performance |
| Timeline |
| Umicore SA |
| ageas SANV |
Umicore SA and Ageas SANV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Umicore SA and Ageas SANV
The main advantage of trading using opposite Umicore SA and Ageas SANV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Umicore SA position performs unexpectedly, Ageas SANV 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 Ageas SANV will offset losses from the drop in Ageas SANV's long position.The idea behind Umicore SA and ageas SANV 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.| Ageas SANV vs. KBC Groep NV | Ageas SANV vs. Groep Brussel Lambert | Ageas SANV vs. Solvay SA | Ageas SANV vs. Ackermans Van Haaren |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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