Correlation Between Home Invest and Vastned Retail

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

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

Diversification Opportunities for Home Invest and Vastned Retail

0.53

Correlation Coefficient

Home Invest  Vastned Retail

Very weak diversification

The 3 months correlation between Home and Vastned is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Home Invest Belgium 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 Home Invest 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 Home Invest Belgium 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 Home Invest i.e., Home Invest and Vastned Retail go up and down completely randomly.

Pair Corralation between Home Invest and Vastned Retail

Assuming the 90 days trading horizon Home Invest Belgium is expected to under-perform the Vastned Retail. In addition to that, Home Invest is 1.22 times more volatile than Vastned Retail Belgium. It trades about -0.16 of its total potential returns per unit of risk. Vastned Retail Belgium is currently generating about -0.04 per unit of volatility. If you would invest  2,931  in Vastned Retail Belgium on August 30, 2024 and sell it today you would lose (121.00) from holding Vastned Retail Belgium or give up 4.13% of portfolio value over 90 days.

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

Home Invest Belgium  vs.  Vastned Retail Belgium

Home Invest Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Invest Belgium 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 December 2024. 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 somewhat strong fundamental drivers, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Invest and Vastned Retail

The main advantage of trading using opposite Home Invest and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Invest 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 Home Invest Belgium 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.