Correlation Between VGP NV and Banimmo SA
Can any of the company-specific risk be diversified away by investing in both VGP NV and Banimmo SA 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 Banimmo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGP NV and Banimmo SA, you can compare the effects of market volatilities on VGP NV and Banimmo SA 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 Banimmo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and Banimmo SA.
Diversification Opportunities for VGP NV and Banimmo SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VGP and Banimmo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Banimmo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banimmo SA 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 Banimmo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banimmo SA has no effect on the direction of VGP NV i.e., VGP NV and Banimmo SA go up and down completely randomly.
Pair Corralation between VGP NV and Banimmo SA
Assuming the 90 days trading horizon VGP NV is expected to generate 2.54 times more return on investment than Banimmo SA. However, VGP NV is 2.54 times more volatile than Banimmo SA. It trades about 0.05 of its potential returns per unit of risk. Banimmo SA is currently generating about -0.03 per unit of risk. If you would invest 7,740 in VGP NV on September 2, 2024 and sell it today you would earn a total of 160.00 from holding VGP NV or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VGP NV vs. Banimmo SA
Performance |
| Timeline |
| VGP NV |
| Banimmo SA |
VGP NV and Banimmo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VGP NV and Banimmo SA
The main advantage of trading using opposite VGP NV and Banimmo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV position performs unexpectedly, Banimmo SA 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 Banimmo SA will offset losses from the drop in Banimmo SA's long position.The idea behind VGP NV and Banimmo SA 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.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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