Correlation Between Eurocastle Investment and NN Group

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

By analyzing existing cross correlation between Eurocastle Investment and NN Group NV, you can compare the effects of market volatilities on Eurocastle Investment and NN Group 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 Eurocastle Investment with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurocastle Investment and NN Group.

Diversification Opportunities for Eurocastle Investment and NN Group

0.08

Correlation Coefficient

Eurocastle Investment  NN Group

Significant diversification

The 3 months correlation between Eurocastle and NN Group is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eurocastle Investment and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Eurocastle Investment 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 Eurocastle Investment are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Eurocastle Investment i.e., Eurocastle Investment and NN Group go up and down completely randomly.

Pair Corralation between Eurocastle Investment and NN Group

Assuming the 90 days trading horizon Eurocastle Investment is expected to generate 14.05 times more return on investment than NN Group. However, Eurocastle Investment is 14.05 times more volatile than NN Group NV. It trades about 0.23 of its potential returns per unit of risk. NN Group NV is currently generating about -0.46 per unit of risk. If you would invest  600.00  in Eurocastle Investment on September 19, 2024 and sell it today you would earn a total of  210.00  from holding Eurocastle Investment or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.64%
Values	Daily Returns

Eurocastle Investment  vs.  NN Group NV

Eurocastle Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocastle Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eurocastle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Eurocastle Investment and NN Group

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

The idea behind Eurocastle Investment and NN Group NV 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.