Correlation Between Jensen and NV Bekaert

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

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

Diversification Opportunities for Jensen and NV Bekaert

-0.51

Correlation Coefficient

Jensen  NV Bekaert

Excellent diversification

The 3 months correlation between Jensen and BEKB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group 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 Jensen 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 Jensen Group 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 Jensen i.e., Jensen and NV Bekaert go up and down completely randomly.

Pair Corralation between Jensen and NV Bekaert

Assuming the 90 days trading horizon Jensen Group is expected to generate 1.3 times more return on investment than NV Bekaert. However, Jensen is 1.3 times more volatile than NV Bekaert SA. It trades about 0.01 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.1 per unit of risk. If you would invest  4,150  in Jensen Group on September 24, 2024 and sell it today you would earn a total of  10.00  from holding Jensen Group or generate 0.24% return on investment over 90 days.

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

Jensen Group  vs.  NV Bekaert SA

Jensen Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jensen Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Jensen is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the 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 Jensen and NV Bekaert

The main advantage of trading using opposite Jensen and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen 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 Jensen Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.