Correlation Between Arcadis NV and Badger Infrastructure

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

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

Diversification Opportunities for Arcadis NV and Badger Infrastructure

0.1

Correlation Coefficient

Arcadis NV  Badger Infrastructure

Average diversification

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

Pair Corralation between Arcadis NV and Badger Infrastructure

Assuming the 90 days horizon Arcadis NV is expected to under-perform the Badger Infrastructure. In addition to that, Arcadis NV is 1.05 times more volatile than Badger Infrastructure Solutions. It trades about -0.32 of its total potential returns per unit of risk. Badger Infrastructure Solutions is currently generating about -0.07 per unit of volatility. If you would invest  2,742  in Badger Infrastructure Solutions on December 1, 2024 and sell it today you would lose (78.00) from holding Badger Infrastructure Solutions or give up 2.84% of portfolio value over 90 days.

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

Arcadis NV  vs.  Badger Infrastructure Solution

Arcadis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Badger Infrastructure

Risk-Adjusted Performance

Modest

Over the last 90 days Badger Infrastructure Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Badger Infrastructure is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Arcadis NV and Badger Infrastructure

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

The idea behind Arcadis NV and Badger Infrastructure Solutions 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 Stocks Directory module to find actively traded stocks across global markets.