Correlation Between Banque Nationale and Fagron NV

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

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

Diversification Opportunities for Banque Nationale and Fagron NV

-0.69

Correlation Coefficient

Banque Nationale  Fagron NV

Excellent diversification

The 3 months correlation between Banque and Fagron is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Banque nationale de and Fagron NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagron NV and Banque Nationale 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 Banque nationale de are associated (or correlated) with Fagron NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagron NV has no effect on the direction of Banque Nationale i.e., Banque Nationale and Fagron NV go up and down completely randomly.

Pair Corralation between Banque Nationale and Fagron NV

Assuming the 90 days trading horizon Banque nationale de is expected to under-perform the Fagron NV. In addition to that, Banque Nationale is 1.66 times more volatile than Fagron NV. It trades about -0.02 of its total potential returns per unit of risk. Fagron NV is currently generating about 0.03 per unit of volatility. If you would invest  1,680  in Fagron NV on January 31, 2024 and sell it today you would earn a total of  140.00  from holding Fagron NV or generate 8.33% return on investment over 90 days.

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

Banque nationale de  vs.  Fagron NV

Banque nationale

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fagron NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fagron NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fagron NV may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Banque Nationale and Fagron NV

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

The idea behind Banque nationale de and Fagron 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.