Correlation Between Vastned Retail and CVC Capital

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

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

Diversification Opportunities for Vastned Retail and CVC Capital

-0.06

Correlation Coefficient

Vastned Retail  CVC Capital

Good diversification

The 3 months correlation between Vastned and CVC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and CVC Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Capital Partners and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with CVC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Capital Partners has no effect on the direction of Vastned Retail i.e., Vastned Retail and CVC Capital go up and down completely randomly.

Pair Corralation between Vastned Retail and CVC Capital

Assuming the 90 days trading horizon Vastned Retail NV is expected to under-perform the CVC Capital. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 1.79 times less risky than CVC Capital. The stock trades about -0.04 of its potential returns per unit of risk. The CVC Capital Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,987  in CVC Capital Partners on September 19, 2024 and sell it today you would earn a total of  193.00  from holding CVC Capital Partners or generate 9.71% return on investment over 90 days.

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

Vastned Retail NV  vs.  CVC Capital Partners

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CVC Capital Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Capital Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CVC Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vastned Retail and CVC Capital

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

The idea behind Vastned Retail NV and CVC Capital Partners 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.