Correlation Between Koninklijke Ahold and Wolters Kluwer

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

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

Diversification Opportunities for Koninklijke Ahold and Wolters Kluwer

0.1

Correlation Coefficient

Koninklijke Ahold  Wolters Kluwer

Average diversification

The 3 months correlation between Koninklijke and Wolters is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV and Koninklijke Ahold 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 Koninklijke Ahold Delhaize are associated (or correlated) with Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and Wolters Kluwer go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Wolters Kluwer

Assuming the 90 days horizon Koninklijke Ahold Delhaize is expected to generate 0.75 times more return on investment than Wolters Kluwer. However, Koninklijke Ahold Delhaize is 1.34 times less risky than Wolters Kluwer. It trades about 0.13 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about -0.08 per unit of risk. If you would invest  3,125  in Koninklijke Ahold Delhaize on December 30, 2024 and sell it today you would earn a total of  334.00  from holding Koninklijke Ahold Delhaize or generate 10.69% return on investment over 90 days.

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

Koninklijke Ahold Delhaize  vs.  Wolters Kluwer NV

Koninklijke Ahold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Koninklijke Ahold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wolters Kluwer NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Koninklijke Ahold and Wolters Kluwer

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

The idea behind Koninklijke Ahold Delhaize and Wolters Kluwer NV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..