Correlation Between Brederode and Immolease Trust

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

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

Diversification Opportunities for Brederode and Immolease Trust

-0.63

Correlation Coefficient

Brederode  Immolease Trust

Excellent diversification

The 3 months correlation between Brederode and Immolease is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brederode SA and Immolease Trust NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immolease Trust NV and Brederode 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 Brederode SA are associated (or correlated) with Immolease Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immolease Trust NV has no effect on the direction of Brederode i.e., Brederode and Immolease Trust go up and down completely randomly.

Pair Corralation between Brederode and Immolease Trust

Assuming the 90 days trading horizon Brederode SA is expected to under-perform the Immolease Trust. But the stock apears to be less risky and, when comparing its historical volatility, Brederode SA is 2.07 times less risky than Immolease Trust. The stock trades about -0.06 of its potential returns per unit of risk. The Immolease Trust NV is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  9,800  in Immolease Trust NV on December 4, 2024 and sell it today you would earn a total of  1,000.00  from holding Immolease Trust NV or generate 10.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.27%
Values	Daily Returns

Brederode SA  vs.  Immolease Trust NV

Brederode SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brederode SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Brederode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Immolease Trust NV

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Brederode and Immolease Trust

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

The idea behind Brederode SA and Immolease Trust 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.