Correlation Between Klépierre and Taylor Wimpey

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

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

Diversification Opportunities for Klépierre and Taylor Wimpey

0.02

Correlation Coefficient

Klépierre  Taylor Wimpey

Significant diversification

The 3 months correlation between Klépierre and Taylor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Klpierre SA and Taylor Wimpey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Wimpey PLC and Klépierre 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 Klpierre SA are associated (or correlated) with Taylor Wimpey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Wimpey PLC has no effect on the direction of Klépierre i.e., Klépierre and Taylor Wimpey go up and down completely randomly.

Pair Corralation between Klépierre and Taylor Wimpey

Assuming the 90 days horizon Klpierre SA is expected to generate 0.92 times more return on investment than Taylor Wimpey. However, Klpierre SA is 1.08 times less risky than Taylor Wimpey. It trades about 0.14 of its potential returns per unit of risk. Taylor Wimpey PLC is currently generating about 0.01 per unit of risk. If you would invest  2,811  in Klpierre SA on December 30, 2024 and sell it today you would earn a total of  527.00  from holding Klpierre SA or generate 18.75% return on investment over 90 days.

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

Klpierre SA  vs.  Taylor Wimpey PLC

Klpierre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Klpierre SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Klépierre reported solid returns over the last few months and may actually be approaching a breakup point.

Taylor Wimpey PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taylor Wimpey PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Taylor Wimpey is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Klépierre and Taylor Wimpey

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

The idea behind Klpierre SA and Taylor Wimpey PLC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.