Correlation Between Koninklijke Vopak and Koninklijke BAM
Can any of the company-specific risk be diversified away by investing in both Koninklijke Vopak and Koninklijke BAM 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 Koninklijke Vopak and Koninklijke BAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Vopak NV and Koninklijke BAM Groep, you can compare the effects of market volatilities on Koninklijke Vopak and Koninklijke BAM 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 Koninklijke Vopak with a short position of Koninklijke BAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Vopak and Koninklijke BAM.
Diversification Opportunities for Koninklijke Vopak and Koninklijke BAM
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Koninklijke and Koninklijke is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Vopak NV and Koninklijke BAM Groep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke BAM Groep and Koninklijke Vopak 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 Koninklijke Vopak NV are associated (or correlated) with Koninklijke BAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke BAM Groep has no effect on the direction of Koninklijke Vopak i.e., Koninklijke Vopak and Koninklijke BAM go up and down completely randomly.
Pair Corralation between Koninklijke Vopak and Koninklijke BAM
Assuming the 90 days trading horizon Koninklijke Vopak is expected to generate 1.4 times less return on investment than Koninklijke BAM. But when comparing it to its historical volatility, Koninklijke Vopak NV is 1.55 times less risky than Koninklijke BAM. It trades about 0.09 of its potential returns per unit of risk. Koninklijke BAM Groep is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Koninklijke BAM Groep on August 24, 2024 and sell it today you would earn a total of 203.00 from holding Koninklijke BAM Groep or generate 102.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Vopak NV vs. Koninklijke BAM Groep
Performance |
| Timeline |
| Koninklijke Vopak |
| Koninklijke BAM Groep |
Koninklijke Vopak and Koninklijke BAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Vopak and Koninklijke BAM
The main advantage of trading using opposite Koninklijke Vopak and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Vopak position performs unexpectedly, Koninklijke BAM 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 Koninklijke BAM will offset losses from the drop in Koninklijke BAM's long position.| Koninklijke Vopak vs. Aalberts Industries NV | Koninklijke Vopak vs. SBM Offshore NV | Koninklijke Vopak vs. NN Group NV | Koninklijke Vopak vs. Randstad NV |
| Koninklijke BAM vs. Fugro NV | Koninklijke BAM vs. SBM Offshore NV | Koninklijke BAM vs. Aegon NV | Koninklijke BAM vs. PostNL 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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