Correlation Between Warehouses and Brederode
Can any of the company-specific risk be diversified away by investing in both Warehouses and Brederode 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 Warehouses and Brederode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warehouses de Pauw and Brederode SA, you can compare the effects of market volatilities on Warehouses and Brederode 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 Warehouses with a short position of Brederode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and Brederode.
Diversification Opportunities for Warehouses and Brederode
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warehouses and Brederode is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses de Pauw and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and Warehouses 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 Warehouses de Pauw are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Warehouses i.e., Warehouses and Brederode go up and down completely randomly.
Pair Corralation between Warehouses and Brederode
Assuming the 90 days trading horizon Warehouses de Pauw is expected to generate 1.21 times more return on investment than Brederode. However, Warehouses is 1.21 times more volatile than Brederode SA. It trades about 0.3 of its potential returns per unit of risk. Brederode SA is currently generating about 0.2 per unit of risk. If you would invest 1,898 in Warehouses de Pauw on November 3, 2024 and sell it today you would earn a total of 182.00 from holding Warehouses de Pauw or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warehouses de Pauw vs. Brederode SA
Performance |
| Timeline |
| Warehouses de Pauw |
| Brederode SA |
Warehouses and Brederode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warehouses and Brederode
The main advantage of trading using opposite Warehouses and Brederode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses position performs unexpectedly, Brederode 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 Brederode will offset losses from the drop in Brederode's long position.| Warehouses vs. Aedifica | Warehouses vs. Cofinimmo SA | Warehouses vs. VGP NV | Warehouses vs. Sofina Socit Anonyme |
| Brederode vs. Immolease Trust NV | Brederode vs. Retail Estates | Brederode vs. Onward Medical NV | Brederode vs. Vastned Retail Belgium |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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