Correlation Between NV Nederlandsche and IShares VII

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

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

Diversification Opportunities for NV Nederlandsche and IShares VII

0.7

Correlation Coefficient

NV Nederlandsche  IShares VII

Poor diversification

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

Pair Corralation between NV Nederlandsche and IShares VII

Assuming the 90 days trading horizon NV Nederlandsche Apparatenfabriek is expected to under-perform the IShares VII. But the stock apears to be less risky and, when comparing its historical volatility, NV Nederlandsche Apparatenfabriek is 1.17 times less risky than IShares VII. The stock trades about -0.08 of its potential returns per unit of risk. The iShares VII Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  13,201  in iShares VII Public on September 17, 2024 and sell it today you would lose (67.00) from holding iShares VII Public or give up 0.51% of portfolio value over 90 days.

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

NV Nederlandsche Apparatenfabr  vs.  iShares VII Public

NV Nederlandsche App

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares VII Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares VII Public has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares VII is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NV Nederlandsche and IShares VII

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

The idea behind NV Nederlandsche Apparatenfabriek and iShares VII Public 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.