Correlation Between VGP NV and Elia Group

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

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

Diversification Opportunities for VGP NV and Elia Group

0.94

Correlation Coefficient

VGP NV  Elia Group

Almost no diversification

The 3 months correlation between VGP and Elia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV and VGP 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 VGP NV are associated (or correlated) with Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of VGP NV i.e., VGP NV and Elia Group go up and down completely randomly.

Pair Corralation between VGP NV and Elia Group

Assuming the 90 days trading horizon VGP NV is expected to under-perform the Elia Group. In addition to that, VGP NV is 1.09 times more volatile than Elia Group SANV. It trades about -0.04 of its total potential returns per unit of risk. Elia Group SANV is currently generating about -0.03 per unit of volatility. If you would invest  10,490  in Elia Group SANV on September 3, 2024 and sell it today you would lose (1,625) from holding Elia Group SANV or give up 15.49% of portfolio value over 90 days.

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

VGP NV  vs.  Elia Group SANV

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Elia Group SANV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elia Group SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with VGP NV and Elia Group

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

The idea behind VGP NV and Elia Group SANV 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.