Correlation Between Vastned Retail and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Vastned Retail and FARO Technologies 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 Vastned Retail and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vastned Retail NV and FARO Technologies, you can compare the effects of market volatilities on Vastned Retail and FARO Technologies 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 Vastned Retail with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and FARO Technologies.
Diversification Opportunities for Vastned Retail and FARO Technologies
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vastned and FARO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Vastned Retail i.e., Vastned Retail and FARO Technologies go up and down completely randomly.
Pair Corralation between Vastned Retail and FARO Technologies
Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 2.63 times less risky than FARO Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,500 in FARO Technologies on September 12, 2024 and sell it today you would earn a total of 80.00 from holding FARO Technologies or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vastned Retail NV vs. FARO Technologies
Performance |
| Timeline |
| Vastned Retail NV |
| FARO Technologies |
Vastned Retail and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vastned Retail and FARO Technologies
The main advantage of trading using opposite Vastned Retail and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vastned Retail position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Vastned Retail vs. Vicinity Centres | Vastned Retail vs. Superior Plus Corp | Vastned Retail vs. NMI Holdings | Vastned Retail vs. SIVERS SEMICONDUCTORS AB |
| FARO Technologies vs. HEXAGON AB ADR1 | FARO Technologies vs. Superior Plus Corp | FARO Technologies vs. SIVERS SEMICONDUCTORS AB | FARO Technologies vs. NorAm Drilling AS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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