Correlation Between Cofinimmo and Vastned Retail

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

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

Diversification Opportunities for Cofinimmo and Vastned Retail

0.58

Correlation Coefficient

Cofinimmo  Vastned Retail

Very weak diversification

The 3 months correlation between Cofinimmo and Vastned is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cofinimmo SA and Vastned Retail Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail Belgium and Cofinimmo 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 Cofinimmo SA are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail Belgium has no effect on the direction of Cofinimmo i.e., Cofinimmo and Vastned Retail go up and down completely randomly.

Pair Corralation between Cofinimmo and Vastned Retail

Assuming the 90 days trading horizon Cofinimmo SA is expected to under-perform the Vastned Retail. But the stock apears to be less risky and, when comparing its historical volatility, Cofinimmo SA is 1.12 times less risky than Vastned Retail. The stock trades about -0.2 of its potential returns per unit of risk. The Vastned Retail Belgium is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  3,014  in Vastned Retail Belgium on September 5, 2024 and sell it today you would lose (244.00) from holding Vastned Retail Belgium or give up 8.1% of portfolio value over 90 days.

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

Cofinimmo SA  vs.  Vastned Retail Belgium

Cofinimmo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cofinimmo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vastned Retail Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cofinimmo and Vastned Retail

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

The idea behind Cofinimmo SA and Vastned Retail 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.