Correlation Between Exor NV and Aalberts Industries
Can any of the company-specific risk be diversified away by investing in both Exor NV and Aalberts Industries 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 Exor NV and Aalberts Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exor NV and Aalberts Industries NV, you can compare the effects of market volatilities on Exor NV and Aalberts Industries 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 Exor NV with a short position of Aalberts Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exor NV and Aalberts Industries.
Diversification Opportunities for Exor NV and Aalberts Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exor and Aalberts is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exor NV and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries and Exor 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 Exor NV are associated (or correlated) with Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of Exor NV i.e., Exor NV and Aalberts Industries go up and down completely randomly.
Pair Corralation between Exor NV and Aalberts Industries
Assuming the 90 days trading horizon Exor NV is expected to generate 1.14 times more return on investment than Aalberts Industries. However, Exor NV is 1.14 times more volatile than Aalberts Industries NV. It trades about 0.12 of its potential returns per unit of risk. Aalberts Industries NV is currently generating about -0.04 per unit of risk. If you would invest 10,060 in Exor NV on February 5, 2024 and sell it today you would earn a total of 300.00 from holding Exor NV or generate 2.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Exor NV vs. Aalberts Industries NV
Performance |
Timeline |
Exor NV |
Aalberts Industries |
Exor NV and Aalberts Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exor NV and Aalberts Industries
The main advantage of trading using opposite Exor NV and Aalberts Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exor NV position performs unexpectedly, Aalberts Industries 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 Aalberts Industries will offset losses from the drop in Aalberts Industries' long position.Exor NV vs. CM NV | Exor NV vs. BE Semiconductor Industries | Exor NV vs. Alfen Beheer BV | Exor NV vs. ASR Nederland NV |
Aalberts Industries vs. Fastned BV | Aalberts Industries vs. Basic Fit NV | Aalberts Industries vs. BE Semiconductor Industries | Aalberts Industries vs. ASM International 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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