Correlation Between HomeToGo and Vastned Retail

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Can any of the company-specific risk be diversified away by investing in both HomeToGo and Vastned Retail 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 HomeToGo and Vastned Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Vastned Retail NV, you can compare the effects of market volatilities on HomeToGo and Vastned Retail 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 HomeToGo with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Vastned Retail.

Diversification Opportunities for HomeToGo and Vastned Retail

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between HomeToGo and Vastned is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV and HomeToGo 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 HomeToGo SE are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of HomeToGo i.e., HomeToGo and Vastned Retail go up and down completely randomly.

Pair Corralation between HomeToGo and Vastned Retail

Assuming the 90 days trading horizon HomeToGo is expected to generate 2.34 times less return on investment than Vastned Retail. In addition to that, HomeToGo is 3.73 times more volatile than Vastned Retail NV. It trades about 0.09 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about 0.81 per unit of volatility. If you would invest  2,105  in Vastned Retail NV on October 22, 2024 and sell it today you would earn a total of  55.00  from holding Vastned Retail NV or generate 2.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy23.53%
ValuesDaily Returns

HomeToGo SE  vs.  Vastned Retail NV

 Performance 
       Timeline  
HomeToGo SE 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Vastned Retail NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

HomeToGo and Vastned Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HomeToGo and Vastned Retail

The main advantage of trading using opposite HomeToGo and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail's long position.
The idea behind HomeToGo SE and Vastned Retail 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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