Correlation Between Warehouses and Eurocommercial Properties
Can any of the company-specific risk be diversified away by investing in both Warehouses and Eurocommercial Properties 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 Eurocommercial Properties 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 Eurocommercial Properties NV, you can compare the effects of market volatilities on Warehouses and Eurocommercial Properties 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 Eurocommercial Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and Eurocommercial Properties.
Diversification Opportunities for Warehouses and Eurocommercial Properties
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warehouses and Eurocommercial is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses de Pauw and Eurocommercial Properties NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurocommercial Properties 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 Eurocommercial Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurocommercial Properties has no effect on the direction of Warehouses i.e., Warehouses and Eurocommercial Properties go up and down completely randomly.
Pair Corralation between Warehouses and Eurocommercial Properties
Assuming the 90 days trading horizon Warehouses is expected to generate 12.14 times less return on investment than Eurocommercial Properties. In addition to that, Warehouses is 1.74 times more volatile than Eurocommercial Properties NV. It trades about 0.02 of its total potential returns per unit of risk. Eurocommercial Properties NV is currently generating about 0.34 per unit of volatility. If you would invest 2,300 in Eurocommercial Properties NV on November 29, 2024 and sell it today you would earn a total of 140.00 from holding Eurocommercial Properties NV or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warehouses de Pauw vs. Eurocommercial Properties NV
Performance |
| Timeline |
| Warehouses de Pauw |
| Eurocommercial Properties |
Warehouses and Eurocommercial Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warehouses and Eurocommercial Properties
The main advantage of trading using opposite Warehouses and Eurocommercial Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses position performs unexpectedly, Eurocommercial Properties 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 Eurocommercial Properties will offset losses from the drop in Eurocommercial Properties' long position.| Warehouses vs. Aedifica | Warehouses vs. Cofinimmo SA | Warehouses vs. VGP NV | Warehouses vs. Sofina Socit Anonyme |
| Eurocommercial Properties vs. Wereldhave NV | Eurocommercial Properties vs. NSI NV | Eurocommercial Properties vs. Klepierre SA | Eurocommercial Properties vs. Koninklijke BAM Groep |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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