Correlation Between Taylor Wimpey and Klépierre

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

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

Diversification Opportunities for Taylor Wimpey and Klépierre

0.02

Correlation Coefficient

Taylor Wimpey  Klépierre

Significant diversification

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

Pair Corralation between Taylor Wimpey and Klépierre

Assuming the 90 days horizon Taylor Wimpey is expected to generate 14.99 times less return on investment than Klépierre. In addition to that, Taylor Wimpey is 1.08 times more volatile than Klpierre SA. It trades about 0.01 of its total potential returns per unit of risk. Klpierre SA is currently generating about 0.14 per unit of volatility. 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

Taylor Wimpey PLC  vs.  Klpierre SA

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.

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.

Pair Trading with Taylor Wimpey and Klépierre

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

The idea behind Taylor Wimpey PLC and Klpierre 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.