Correlation Between Impact Growth and KPN Property

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

By analyzing existing cross correlation between Impact Growth REIT and KPN Property, you can compare the effects of market volatilities on Impact Growth and KPN Property 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 Impact Growth with a short position of KPN Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Growth and KPN Property.

Diversification Opportunities for Impact Growth and KPN Property

-0.23

Correlation Coefficient

Impact Growth  KPN Property

Very good diversification

The 3 months correlation between Impact and KPN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Impact Growth REIT and KPN Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPN Property and Impact Growth 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 Impact Growth REIT are associated (or correlated) with KPN Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPN Property has no effect on the direction of Impact Growth i.e., Impact Growth and KPN Property go up and down completely randomly.

Pair Corralation between Impact Growth and KPN Property

Assuming the 90 days trading horizon Impact Growth REIT is expected to generate 0.05 times more return on investment than KPN Property. However, Impact Growth REIT is 18.5 times less risky than KPN Property. It trades about -0.07 of its potential returns per unit of risk. KPN Property is currently generating about -0.23 per unit of risk. If you would invest  1,100  in Impact Growth REIT on September 28, 2024 and sell it today you would lose (20.00) from holding Impact Growth REIT or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Impact Growth REIT  vs.  KPN Property

Impact Growth REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Growth REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KPN Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KPN Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Impact Growth and KPN Property

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

The idea behind Impact Growth REIT and KPN Property 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.