Correlation Between Formuepleje Mix and Laan Spar

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

By analyzing existing cross correlation between Formuepleje Mix Medium and Laan Spar Bank, you can compare the effects of market volatilities on Formuepleje Mix and Laan Spar 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 Formuepleje Mix with a short position of Laan Spar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formuepleje Mix and Laan Spar.

Diversification Opportunities for Formuepleje Mix and Laan Spar

0.18

Correlation Coefficient

Formuepleje Mix  Laan Spar

Average diversification

The 3 months correlation between Formuepleje and Laan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Formuepleje Mix Medium and Laan Spar Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laan Spar Bank and Formuepleje Mix 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 Formuepleje Mix Medium are associated (or correlated) with Laan Spar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laan Spar Bank has no effect on the direction of Formuepleje Mix i.e., Formuepleje Mix and Laan Spar go up and down completely randomly.

Pair Corralation between Formuepleje Mix and Laan Spar

Assuming the 90 days trading horizon Formuepleje Mix Medium is expected to generate 0.46 times more return on investment than Laan Spar. However, Formuepleje Mix Medium is 2.18 times less risky than Laan Spar. It trades about 0.07 of its potential returns per unit of risk. Laan Spar Bank is currently generating about -0.01 per unit of risk. If you would invest  28,320  in Formuepleje Mix Medium on October 4, 2024 and sell it today you would earn a total of  1,180  from holding Formuepleje Mix Medium or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Formuepleje Mix Medium  vs.  Laan Spar Bank

Formuepleje Mix Medium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Mix Medium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Laan Spar Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laan Spar Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Laan Spar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Formuepleje Mix and Laan Spar

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

The idea behind Formuepleje Mix Medium and Laan Spar Bank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.