Correlation Between NV Bekaert and Warehouses Estates

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

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

Diversification Opportunities for NV Bekaert and Warehouses Estates

0.78

Correlation Coefficient

NV Bekaert  Warehouses Estates

Poor diversification

The 3 months correlation between BEKB and Warehouses is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Warehouses Estates Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses Estates and NV Bekaert 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 NV Bekaert SA 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 NV Bekaert i.e., NV Bekaert and Warehouses Estates go up and down completely randomly.

Pair Corralation between NV Bekaert and Warehouses Estates

Assuming the 90 days trading horizon NV Bekaert SA is expected to under-perform the Warehouses Estates. In addition to that, NV Bekaert is 1.92 times more volatile than Warehouses Estates Belgium. It trades about -0.1 of its total potential returns per unit of risk. Warehouses Estates Belgium is currently generating about -0.03 per unit of volatility. If you would invest  3,850  in Warehouses Estates Belgium on September 4, 2024 and sell it today you would lose (80.00) from holding Warehouses Estates Belgium or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NV Bekaert SA  vs.  Warehouses Estates Belgium

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Warehouses Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses Estates Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Warehouses Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NV Bekaert and Warehouses Estates

The main advantage of trading using opposite NV Bekaert and Warehouses Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Bekaert 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 NV Bekaert SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.