Correlation Between Wereldhave and Vastned Retail

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

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

Diversification Opportunities for Wereldhave and Vastned Retail

-0.03

Correlation Coefficient

Wereldhave  Vastned Retail

Good diversification

The 3 months correlation between Wereldhave and Vastned is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Wereldhave NV and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV and Wereldhave 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 Wereldhave NV are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of Wereldhave i.e., Wereldhave and Vastned Retail go up and down completely randomly.

Pair Corralation between Wereldhave and Vastned Retail

Assuming the 90 days trading horizon Wereldhave NV is expected to under-perform the Vastned Retail. But the stock apears to be less risky and, when comparing its historical volatility, Wereldhave NV is 1.22 times less risky than Vastned Retail. The stock trades about -0.05 of its potential returns per unit of risk. The Vastned Retail NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,420  in Vastned Retail NV on September 1, 2024 and sell it today you would earn a total of  40.00  from holding Vastned Retail NV or generate 1.65% return on investment over 90 days.

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

Wereldhave NV  vs.  Vastned Retail NV

Wereldhave NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vastned Retail NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wereldhave and Vastned Retail

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

The idea behind Wereldhave NV and Vastned Retail NV 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.