Correlation Between Compagnie and Barco NV

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

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

Diversification Opportunities for Compagnie and Barco NV

0.76

Correlation Coefficient

Compagnie  Barco NV

Poor diversification

The 3 months correlation between Compagnie and Barco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie d Entreprises and Barco NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barco NV and Compagnie 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 Compagnie d Entreprises are associated (or correlated) with Barco NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barco NV has no effect on the direction of Compagnie i.e., Compagnie and Barco NV go up and down completely randomly.

Pair Corralation between Compagnie and Barco NV

Assuming the 90 days trading horizon Compagnie d Entreprises is expected to under-perform the Barco NV. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie d Entreprises is 1.4 times less risky than Barco NV. The stock trades about -0.13 of its potential returns per unit of risk. The Barco NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,097  in Barco NV on September 15, 2024 and sell it today you would lose (38.00) from holding Barco NV or give up 3.46% of portfolio value over 90 days.

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

Compagnie d Entreprises  vs.  Barco NV

Compagnie d Entreprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie d Entreprises 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.

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.

Pair Trading with Compagnie and Barco NV

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

The idea behind Compagnie d Entreprises and Barco 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.