Correlation Between Groep Brussel and Eurazeo

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

By analyzing existing cross correlation between Groep Brussel Lambert and Eurazeo, you can compare the effects of market volatilities on Groep Brussel and Eurazeo 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 Groep Brussel with a short position of Eurazeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groep Brussel and Eurazeo.

Diversification Opportunities for Groep Brussel and Eurazeo

-0.11

Correlation Coefficient

Groep Brussel  Eurazeo

Good diversification

The 3 months correlation between Groep and Eurazeo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo and Groep Brussel 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 Groep Brussel Lambert are associated (or correlated) with Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of Groep Brussel i.e., Groep Brussel and Eurazeo go up and down completely randomly.

Pair Corralation between Groep Brussel and Eurazeo

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to generate 0.68 times more return on investment than Eurazeo. However, Groep Brussel Lambert is 1.47 times less risky than Eurazeo. It trades about 0.1 of its potential returns per unit of risk. Eurazeo is currently generating about -0.19 per unit of risk. If you would invest  6,870  in Groep Brussel Lambert on December 30, 2024 and sell it today you would earn a total of  155.00  from holding Groep Brussel Lambert or generate 2.26% return on investment over 90 days.

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

Groep Brussel Lambert  vs.  Eurazeo

Groep Brussel Lambert

Risk-Adjusted Performance

OK

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

Eurazeo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eurazeo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eurazeo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Groep Brussel and Eurazeo

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

The idea behind Groep Brussel Lambert and Eurazeo 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.