Correlation Between Brederode and Jensen

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

By analyzing existing cross correlation between Brederode SA and Jensen Group, you can compare the effects of market volatilities on Brederode and Jensen 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 Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brederode and Jensen.

Diversification Opportunities for Brederode and Jensen

0.79

Correlation Coefficient

Brederode  Jensen

Poor diversification

The 3 months correlation between Brederode and Jensen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Brederode SA and Jensen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Group 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 Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Group has no effect on the direction of Brederode i.e., Brederode and Jensen go up and down completely randomly.

Pair Corralation between Brederode and Jensen

Assuming the 90 days trading horizon Brederode is expected to generate 2.03 times less return on investment than Jensen. But when comparing it to its historical volatility, Brederode SA is 1.27 times less risky than Jensen. It trades about 0.07 of its potential returns per unit of risk. Jensen Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,350  in Jensen Group on December 2, 2024 and sell it today you would earn a total of  260.00  from holding Jensen Group or generate 5.98% return on investment over 90 days.

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

Brederode SA  vs.  Jensen Group

Brederode SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brederode SA are ranked lower than 12 (%) 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.

Jensen Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jensen Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Jensen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brederode and Jensen

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

The idea behind Brederode SA and Jensen Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.