Correlation Between Barco NV and Umicore SA

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

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

Diversification Opportunities for Barco NV and Umicore SA

0.7

Correlation Coefficient

Barco NV  Umicore SA

Poor diversification

The 3 months correlation between Barco and Umicore is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barco NV and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA and Barco 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 Barco NV are associated (or correlated) with Umicore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umicore SA has no effect on the direction of Barco NV i.e., Barco NV and Umicore SA go up and down completely randomly.

Pair Corralation between Barco NV and Umicore SA

Assuming the 90 days trading horizon Barco NV is expected to under-perform the Umicore SA. But the stock apears to be less risky and, when comparing its historical volatility, Barco NV is 1.26 times less risky than Umicore SA. The stock trades about -0.14 of its potential returns per unit of risk. The Umicore SA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Umicore SA on September 15, 2024 and sell it today you would lose (39.00) from holding Umicore SA or give up 3.68% of portfolio value over 90 days.

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

Barco NV  vs.  Umicore SA

Barco NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barco NV 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.

Umicore SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Barco NV and Umicore SA

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

The idea behind Barco NV and Umicore 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..