Correlation Between Bpost NV and Warehouses

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

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

Diversification Opportunities for Bpost NV and Warehouses

-0.07

Correlation Coefficient

Bpost NV  Warehouses

Good diversification

The 3 months correlation between Bpost and Warehouses is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bpost NV and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw and Bpost 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 Bpost NV are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Bpost NV i.e., Bpost NV and Warehouses go up and down completely randomly.

Pair Corralation between Bpost NV and Warehouses

Assuming the 90 days trading horizon Bpost NV is expected to under-perform the Warehouses. In addition to that, Bpost NV is 2.83 times more volatile than Warehouses de Pauw. It trades about -0.07 of its total potential returns per unit of risk. Warehouses de Pauw is currently generating about 0.01 per unit of volatility. If you would invest  2,092  in Warehouses de Pauw on December 2, 2024 and sell it today you would earn a total of  4.00  from holding Warehouses de Pauw or generate 0.19% return on investment over 90 days.

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

Bpost NV  vs.  Warehouses de Pauw

Bpost NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bpost NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat 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.

Warehouses de Pauw

Risk-Adjusted Performance

Very Weak

Over the last 90 days Warehouses de Pauw has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Warehouses 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 Bpost NV and Warehouses

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

The idea behind Bpost NV and Warehouses de Pauw 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.