Correlation Between Tetragon Financial and ABN Amro
Can any of the company-specific risk be diversified away by investing in both Tetragon Financial and ABN Amro 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 Tetragon Financial and ABN Amro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetragon Financial Group and ABN Amro Group, you can compare the effects of market volatilities on Tetragon Financial and ABN Amro 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 Tetragon Financial with a short position of ABN Amro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and ABN Amro.
Diversification Opportunities for Tetragon Financial and ABN Amro
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tetragon and ABN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and ABN Amro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN Amro Group and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with ABN Amro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN Amro Group has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and ABN Amro go up and down completely randomly.
Pair Corralation between Tetragon Financial and ABN Amro
Assuming the 90 days trading horizon Tetragon Financial Group is expected to under-perform the ABN Amro. But the stock apears to be less risky and, when comparing its historical volatility, Tetragon Financial Group is 1.31 times less risky than ABN Amro. The stock trades about -0.12 of its potential returns per unit of risk. The ABN Amro Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,535 in ABN Amro Group on January 26, 2024 and sell it today you would earn a total of 56.00 from holding ABN Amro Group or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tetragon Financial Group vs. ABN Amro Group
Performance |
| Timeline |
| Tetragon Financial |
| ABN Amro Group |
Tetragon Financial and ABN Amro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetragon Financial and ABN Amro
The main advantage of trading using opposite Tetragon Financial and ABN Amro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetragon Financial position performs unexpectedly, ABN Amro 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 ABN Amro will offset losses from the drop in ABN Amro's long position.| Tetragon Financial vs. Eurocastle Investment | Tetragon Financial vs. Boussard and Gavaudan | Tetragon Financial vs. Kendrion NV | Tetragon Financial vs. Brunel International NV |
| ABN Amro vs. ING Groep NV | ABN Amro vs. Aegon NV | ABN Amro vs. NN Group NV | ABN Amro vs. Koninklijke Ahold Delhaize |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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