Correlation Between VGP NV and Montea CVA

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

By analyzing existing cross correlation between VGP NV and Montea CVA, you can compare the effects of market volatilities on VGP NV and Montea CVA 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 Montea CVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and Montea CVA.

Diversification Opportunities for VGP NV and Montea CVA

0.77

Correlation Coefficient

VGP NV  Montea CVA

Poor diversification

The 3 months correlation between VGP and Montea is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Montea CVA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montea CVA 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 Montea CVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montea CVA has no effect on the direction of VGP NV i.e., VGP NV and Montea CVA go up and down completely randomly.

Pair Corralation between VGP NV and Montea CVA

Assuming the 90 days trading horizon VGP NV is expected to generate 1.11 times more return on investment than Montea CVA. However, VGP NV is 1.11 times more volatile than Montea CVA. It trades about 0.14 of its potential returns per unit of risk. Montea CVA is currently generating about 0.07 per unit of risk. If you would invest  7,010  in VGP NV on December 29, 2024 and sell it today you would earn a total of  1,000.00  from holding VGP NV or generate 14.27% return on investment over 90 days.

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

VGP NV  vs.  Montea CVA

VGP NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VGP NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VGP NV reported solid returns over the last few months and may actually be approaching a breakup point.

Montea CVA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Montea CVA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Montea CVA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VGP NV and Montea CVA

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

The idea behind VGP NV and Montea CVA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.