Correlation Between Fountain and NV Bekaert

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

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

Diversification Opportunities for Fountain and NV Bekaert

0.78

Correlation Coefficient

Fountain  NV Bekaert

Poor diversification

The 3 months correlation between Fountain and BEKB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fountain and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Fountain 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 Fountain are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Fountain i.e., Fountain and NV Bekaert go up and down completely randomly.

Pair Corralation between Fountain and NV Bekaert

Assuming the 90 days trading horizon Fountain is expected to under-perform the NV Bekaert. In addition to that, Fountain is 2.72 times more volatile than NV Bekaert SA. It trades about -0.07 of its total potential returns per unit of risk. NV Bekaert SA is currently generating about -0.1 per unit of volatility. If you would invest  3,600  in NV Bekaert SA on September 21, 2024 and sell it today you would lose (328.00) from holding NV Bekaert SA or give up 9.11% of portfolio value over 90 days.

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

Fountain  vs.  NV Bekaert SA

Fountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountain 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.

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.

Pair Trading with Fountain and NV Bekaert

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

The idea behind Fountain and NV Bekaert SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.