Correlation Between Vastned Retail and Johnson Matthey

Can any of the company-specific risk be diversified away by investing in both Vastned Retail and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Vastned Retail and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and Johnson Matthey.

Diversification Opportunities for Vastned Retail and Johnson Matthey

0.56

Correlation Coefficient

Vastned Retail  Johnson Matthey

Very weak diversification

The 3 months correlation between Vastned and Johnson is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Vastned Retail i.e., Vastned Retail and Johnson Matthey go up and down completely randomly.

Pair Corralation between Vastned Retail and Johnson Matthey

Assuming the 90 days trading horizon Vastned Retail NV is expected to generate 0.52 times more return on investment than Johnson Matthey. However, Vastned Retail NV is 1.91 times less risky than Johnson Matthey. It trades about -0.1 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.12 per unit of risk. If you would invest  2,283  in Vastned Retail NV on October 7, 2024 and sell it today you would lose (105.00) from holding Vastned Retail NV or give up 4.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.12%
Values	Daily Returns

Vastned Retail NV  vs.  Johnson Matthey PLC

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. In spite of comparatively stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Johnson Matthey PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Matthey PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vastned Retail and Johnson Matthey

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

The idea behind Vastned Retail NV and Johnson Matthey PLC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.