Correlation Between GIMV NV and Brederode

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

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

Diversification Opportunities for GIMV NV and Brederode

0.7

Correlation Coefficient

GIMV NV  Brederode

Poor diversification

The 3 months correlation between GIMV and Brederode is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GIMV NV and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and GIMV NV 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 GIMV NV are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of GIMV NV i.e., GIMV NV and Brederode go up and down completely randomly.

Pair Corralation between GIMV NV and Brederode

Assuming the 90 days trading horizon GIMV NV is expected to under-perform the Brederode. In addition to that, GIMV NV is 1.13 times more volatile than Brederode SA. It trades about -0.01 of its total potential returns per unit of risk. Brederode SA is currently generating about 0.0 per unit of volatility. If you would invest  10,520  in Brederode SA on September 4, 2024 and sell it today you would lose (20.00) from holding Brederode SA or give up 0.19% of portfolio value over 90 days.

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

GIMV NV  vs.  Brederode SA

GIMV NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIMV NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GIMV NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Brederode SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brederode SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brederode is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GIMV NV and Brederode

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

The idea behind GIMV NV and Brederode 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.