Correlation Between URBAN OUTFITTERS and KBC Group
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS and KBC Group 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 URBAN OUTFITTERS and KBC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and KBC Group NV, you can compare the effects of market volatilities on URBAN OUTFITTERS and KBC Group 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 URBAN OUTFITTERS with a short position of KBC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and KBC Group.
Diversification Opportunities for URBAN OUTFITTERS and KBC Group
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between URBAN and KBC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS and KBC Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Group NV and URBAN OUTFITTERS 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 URBAN OUTFITTERS are associated (or correlated) with KBC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Group NV has no effect on the direction of URBAN OUTFITTERS i.e., URBAN OUTFITTERS and KBC Group go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and KBC Group
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.83 times more return on investment than KBC Group. However, URBAN OUTFITTERS is 1.83 times more volatile than KBC Group NV. It trades about 0.07 of its potential returns per unit of risk. KBC Group NV is currently generating about 0.04 per unit of risk. If you would invest 2,471 in URBAN OUTFITTERS on October 16, 2024 and sell it today you would earn a total of 2,929 from holding URBAN OUTFITTERS or generate 118.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. KBC Group NV
Performance |
| Timeline |
| URBAN OUTFITTERS |
| KBC Group NV |
URBAN OUTFITTERS and KBC Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and KBC Group
The main advantage of trading using opposite URBAN OUTFITTERS and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS position performs unexpectedly, KBC Group 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 KBC Group will offset losses from the drop in KBC Group's long position.| URBAN OUTFITTERS vs. Park Hotels Resorts | URBAN OUTFITTERS vs. Summit Hotel Properties | URBAN OUTFITTERS vs. Hyatt Hotels | URBAN OUTFITTERS vs. PLAYMATES TOYS |
| KBC Group vs. BNP Paribas SA | KBC Group vs. BNP PARIBAS ADR | KBC Group vs. Intesa Sanpaolo SpA | KBC Group vs. Lloyds Banking Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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