Correlation Between ABN Amro and Amsterdam Commodities
Can any of the company-specific risk be diversified away by investing in both ABN Amro and Amsterdam Commodities 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 ABN Amro and Amsterdam Commodities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABN Amro Group and Amsterdam Commodities NV, you can compare the effects of market volatilities on ABN Amro and Amsterdam Commodities 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 ABN Amro with a short position of Amsterdam Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABN Amro and Amsterdam Commodities.
Diversification Opportunities for ABN Amro and Amsterdam Commodities
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ABN and Amsterdam is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ABN Amro Group and Amsterdam Commodities NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amsterdam Commodities and ABN Amro 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 ABN Amro Group are associated (or correlated) with Amsterdam Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amsterdam Commodities has no effect on the direction of ABN Amro i.e., ABN Amro and Amsterdam Commodities go up and down completely randomly.
Pair Corralation between ABN Amro and Amsterdam Commodities
Assuming the 90 days trading horizon ABN Amro is expected to generate 1.15 times less return on investment than Amsterdam Commodities. In addition to that, ABN Amro is 1.52 times more volatile than Amsterdam Commodities NV. It trades about 0.11 of its total potential returns per unit of risk. Amsterdam Commodities NV is currently generating about 0.19 per unit of volatility. If you would invest 1,726 in Amsterdam Commodities NV on January 20, 2024 and sell it today you would earn a total of 50.00 from holding Amsterdam Commodities NV or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABN Amro Group vs. Amsterdam Commodities NV
Performance |
| Timeline |
| ABN Amro Group |
| Amsterdam Commodities |
ABN Amro and Amsterdam Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABN Amro and Amsterdam Commodities
The main advantage of trading using opposite ABN Amro and Amsterdam Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABN Amro position performs unexpectedly, Amsterdam Commodities 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 Amsterdam Commodities will offset losses from the drop in Amsterdam Commodities' long position.| ABN Amro vs. ING Groep NV | ABN Amro vs. Aegon NV | ABN Amro vs. NN Group NV | ABN Amro vs. Koninklijke Ahold Delhaize |
| Amsterdam Commodities vs. TKH Group NV | Amsterdam Commodities vs. Aalberts Industries NV | Amsterdam Commodities vs. Arcadis NV | Amsterdam Commodities vs. Koninklijke Vopak NV |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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