Correlation Between VGP NV and ABO
Can any of the company-specific risk be diversified away by investing in both VGP NV and ABO 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 VGP NV and ABO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGP NV and ABO Group, you can compare the effects of market volatilities on VGP NV and ABO 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 VGP NV with a short position of ABO. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and ABO.
Diversification Opportunities for VGP NV and ABO
Poor diversification
The 3 months correlation between VGP and ABO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and ABO Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABO Group and VGP NV 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 VGP NV are associated (or correlated) with ABO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABO Group has no effect on the direction of VGP NV i.e., VGP NV and ABO go up and down completely randomly.
Pair Corralation between VGP NV and ABO
Assuming the 90 days trading horizon VGP NV is expected to generate 0.95 times more return on investment than ABO. However, VGP NV is 1.06 times less risky than ABO. It trades about 0.01 of its potential returns per unit of risk. ABO Group is currently generating about 0.0 per unit of risk. If you would invest 7,697 in VGP NV on September 4, 2024 and sell it today you would earn a total of 53.00 from holding VGP NV or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.05% |
| Values | Daily Returns |
VGP NV vs. ABO Group
Performance |
| Timeline |
| VGP NV |
| ABO Group |
VGP NV and ABO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VGP NV and ABO
The main advantage of trading using opposite VGP NV and ABO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV position performs unexpectedly, ABO 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 ABO will offset losses from the drop in ABO's long position.| VGP NV vs. Warehouses de Pauw | VGP NV vs. Sofina Socit Anonyme | VGP NV vs. Aedifica | VGP NV vs. Xior Student Housing |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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