Correlation Between Etablissementen Franz and DIeteren Group

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

By analyzing existing cross correlation between Etablissementen Franz Colruyt and DIeteren Group SA, you can compare the effects of market volatilities on Etablissementen Franz and DIeteren 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 Etablissementen Franz with a short position of DIeteren Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etablissementen Franz and DIeteren Group.

Diversification Opportunities for Etablissementen Franz and DIeteren Group

0.82

Correlation Coefficient

Etablissementen Franz  DIeteren Group

Very poor diversification

The 3 months correlation between Etablissementen and DIeteren is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Etablissementen Franz Colruyt and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA and Etablissementen Franz 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 Etablissementen Franz Colruyt are associated (or correlated) with DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of Etablissementen Franz i.e., Etablissementen Franz and DIeteren Group go up and down completely randomly.

Pair Corralation between Etablissementen Franz and DIeteren Group

Assuming the 90 days trading horizon Etablissementen Franz Colruyt is expected to under-perform the DIeteren Group. But the stock apears to be less risky and, when comparing its historical volatility, Etablissementen Franz Colruyt is 1.38 times less risky than DIeteren Group. The stock trades about -0.08 of its potential returns per unit of risk. The DIeteren Group SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  21,920  in DIeteren Group SA on August 31, 2024 and sell it today you would lose (1,760) from holding DIeteren Group SA or give up 8.03% of portfolio value over 90 days.

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

Etablissementen Franz Colruyt  vs.  DIeteren Group SA

Etablissementen Franz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etablissementen Franz Colruyt 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.

DIeteren Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIeteren Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental 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 Etablissementen Franz and DIeteren Group

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

The idea behind Etablissementen Franz Colruyt and DIeteren Group SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.