Correlation Between IMCD NV and Fastned BV

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

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

Diversification Opportunities for IMCD NV and Fastned BV

-0.16

Correlation Coefficient

IMCD NV  Fastned BV

Good diversification

The 3 months correlation between IMCD and Fastned is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding IMCD NV and Fastned BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastned BV and IMCD NV 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 IMCD NV are associated (or correlated) with Fastned BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastned BV has no effect on the direction of IMCD NV i.e., IMCD NV and Fastned BV go up and down completely randomly.

Pair Corralation between IMCD NV and Fastned BV

Assuming the 90 days trading horizon IMCD NV is expected to under-perform the Fastned BV. But the stock apears to be less risky and, when comparing its historical volatility, IMCD NV is 1.6 times less risky than Fastned BV. The stock trades about -0.08 of its potential returns per unit of risk. The Fastned BV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,890  in Fastned BV on September 25, 2024 and sell it today you would earn a total of  270.00  from holding Fastned BV or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

IMCD NV  vs.  Fastned BV

IMCD NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IMCD NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Fastned BV

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with IMCD NV and Fastned BV

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

The idea behind IMCD NV and Fastned BV 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.