Correlation Between GIMV NV and VGP NV

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

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

Diversification Opportunities for GIMV NV and VGP NV

0.4

Correlation Coefficient

GIMV NV  VGP NV

Very weak diversification

The 3 months correlation between GIMV and VGP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GIMV NV and VGP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VGP NV 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 VGP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VGP NV has no effect on the direction of GIMV NV i.e., GIMV NV and VGP NV go up and down completely randomly.

Pair Corralation between GIMV NV and VGP NV

Assuming the 90 days trading horizon GIMV NV is expected to generate 0.68 times more return on investment than VGP NV. However, GIMV NV is 1.47 times less risky than VGP NV. It trades about 0.19 of its potential returns per unit of risk. VGP NV is currently generating about -0.17 per unit of risk. If you would invest  3,915  in GIMV NV on October 7, 2024 and sell it today you would earn a total of  135.00  from holding GIMV NV or generate 3.45% return on investment over 90 days.

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

GIMV NV  vs.  VGP NV

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.

VGP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VGP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GIMV NV and VGP NV

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

The idea behind GIMV NV and VGP 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 Stocks Directory module to find actively traded stocks across global markets.