Correlation Between VGP NV and Warehouses Estates

Can any of the company-specific risk be diversified away by investing in both VGP NV and Warehouses Estates 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 Warehouses Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VGP NV and Warehouses Estates Belgium, you can compare the effects of market volatilities on VGP NV and Warehouses Estates 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 Warehouses Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and Warehouses Estates.

Diversification Opportunities for VGP NV and Warehouses Estates

-0.47

Correlation Coefficient

VGP NV  Warehouses Estates

Very good diversification

The 3 months correlation between VGP and Warehouses is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Warehouses Estates Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses Estates 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 Warehouses Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses Estates has no effect on the direction of VGP NV i.e., VGP NV and Warehouses Estates go up and down completely randomly.

Pair Corralation between VGP NV and Warehouses Estates

Assuming the 90 days trading horizon VGP NV is expected to under-perform the Warehouses Estates. In addition to that, VGP NV is 1.5 times more volatile than Warehouses Estates Belgium. It trades about -0.02 of its total potential returns per unit of risk. Warehouses Estates Belgium is currently generating about 0.02 per unit of volatility. If you would invest  3,407  in Warehouses Estates Belgium on February 6, 2024 and sell it today you would earn a total of  213.00  from holding Warehouses Estates Belgium or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.82%
Values	Daily Returns

VGP NV  vs.  Warehouses Estates Belgium

VGP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VGP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VGP NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Warehouses Estates

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Warehouses Estates Belgium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Warehouses Estates is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VGP NV and Warehouses Estates

The main advantage of trading using opposite VGP NV and Warehouses Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV position performs unexpectedly, Warehouses Estates 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 Warehouses Estates will offset losses from the drop in Warehouses Estates' long position.

The idea behind VGP NV and Warehouses Estates Belgium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.