Correlation Between Van De and Tessenderlo
Can any of the company-specific risk be diversified away by investing in both Van De and Tessenderlo 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 Van De and Tessenderlo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Van de Velde and Tessenderlo, you can compare the effects of market volatilities on Van De and Tessenderlo 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 Van De with a short position of Tessenderlo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van De and Tessenderlo.
Diversification Opportunities for Van De and Tessenderlo
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Van and Tessenderlo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Van de Velde and Tessenderlo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tessenderlo and Van De 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 Van de Velde are associated (or correlated) with Tessenderlo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tessenderlo has no effect on the direction of Van De i.e., Van De and Tessenderlo go up and down completely randomly.
Pair Corralation between Van De and Tessenderlo
Assuming the 90 days trading horizon Van De is expected to generate 2.66 times less return on investment than Tessenderlo. But when comparing it to its historical volatility, Van de Velde is 1.38 times less risky than Tessenderlo. It trades about 0.21 of its potential returns per unit of risk. Tessenderlo is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,888 in Tessenderlo on November 9, 2024 and sell it today you would earn a total of 212.00 from holding Tessenderlo or generate 11.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Van de Velde vs. Tessenderlo
Performance |
| Timeline |
| Van de Velde |
| Tessenderlo |
Van De and Tessenderlo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Van De and Tessenderlo
The main advantage of trading using opposite Van De and Tessenderlo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Van De position performs unexpectedly, Tessenderlo 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 Tessenderlo will offset losses from the drop in Tessenderlo's long position.| Van De vs. EVS Broadcast Equipment | Van De vs. NV Bekaert SA | Van De vs. Tessenderlo | Van De vs. Melexis NV |
| Tessenderlo vs. Ackermans Van Haaren | Tessenderlo vs. NV Bekaert SA | Tessenderlo vs. Groep Brussel Lambert | Tessenderlo vs. Tubize Fin |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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