Correlation Between Brunel International and NN Group

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

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

Diversification Opportunities for Brunel International and NN Group

0.88

Correlation Coefficient

Brunel International  NN Group

Very poor diversification

The 3 months correlation between Brunel and NN Group is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Brunel International NV and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Brunel International 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 Brunel International NV are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Brunel International i.e., Brunel International and NN Group go up and down completely randomly.

Pair Corralation between Brunel International and NN Group

Assuming the 90 days trading horizon Brunel International is expected to generate 1.24 times less return on investment than NN Group. In addition to that, Brunel International is 1.73 times more volatile than NN Group NV. It trades about 0.15 of its total potential returns per unit of risk. NN Group NV is currently generating about 0.32 per unit of volatility. If you would invest  4,180  in NN Group NV on December 29, 2024 and sell it today you would earn a total of  978.00  from holding NN Group NV or generate 23.4% return on investment over 90 days.

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

Brunel International NV  vs.  NN Group NV

Brunel International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brunel International NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brunel International unveiled solid returns over the last few months and may actually be approaching a breakup point.

NN Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NN Group NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NN Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunel International and NN Group

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

The idea behind Brunel International NV and NN Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.