Correlation Between VGP NV and Exmar NV
Can any of the company-specific risk be diversified away by investing in both VGP NV and Exmar NV 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 Exmar NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGP NV and Exmar NV, you can compare the effects of market volatilities on VGP NV and Exmar NV 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 Exmar NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and Exmar NV.
Diversification Opportunities for VGP NV and Exmar NV
Poor diversification
The 3 months correlation between VGP and Exmar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV 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 Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of VGP NV i.e., VGP NV and Exmar NV go up and down completely randomly.
Pair Corralation between VGP NV and Exmar NV
Assuming the 90 days trading horizon VGP NV is expected to generate 8.31 times less return on investment than Exmar NV. But when comparing it to its historical volatility, VGP NV is 1.23 times less risky than Exmar NV. It trades about 0.01 of its potential returns per unit of risk. Exmar NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 361.00 in Exmar NV on August 26, 2024 and sell it today you would earn a total of 446.00 from holding Exmar NV or generate 123.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VGP NV vs. Exmar NV
Performance |
| Timeline |
| VGP NV |
| Exmar NV |
VGP NV and Exmar NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VGP NV and Exmar NV
The main advantage of trading using opposite VGP NV and Exmar NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV position performs unexpectedly, Exmar NV 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 Exmar NV will offset losses from the drop in Exmar NV'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 |
| Exmar NV vs. EVS Broadcast Equipment | Exmar NV vs. NV Bekaert SA | Exmar NV vs. Tessenderlo | Exmar NV vs. Melexis NV |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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