Correlation Between VGP NV and Retail Estates

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

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

Diversification Opportunities for VGP NV and Retail Estates

0.89

Correlation Coefficient

VGP NV  Retail Estates

Very poor diversification

The 3 months correlation between VGP and Retail is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Retail Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates has no effect on the direction of VGP NV i.e., VGP NV and Retail Estates go up and down completely randomly.

Pair Corralation between VGP NV and Retail Estates

Assuming the 90 days trading horizon VGP NV is expected to generate 1.96 times more return on investment than Retail Estates. However, VGP NV is 1.96 times more volatile than Retail Estates . It trades about 0.02 of its potential returns per unit of risk. Retail Estates is currently generating about -0.26 per unit of risk. If you would invest  7,830  in VGP NV on August 30, 2024 and sell it today you would earn a total of  20.00  from holding VGP NV or generate 0.26% return on investment over 90 days.

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

VGP NV  vs.  Retail Estates

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Retail Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates 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.

Pair Trading with VGP NV and Retail Estates

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

The idea behind VGP NV and Retail Estates 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .