Correlation Between Van Lanschot and ForFarmers

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

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

Diversification Opportunities for Van Lanschot and ForFarmers

0.06

Correlation Coefficient

Van Lanschot  ForFarmers

Significant diversification

The 3 months correlation between Van and ForFarmers is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Van Lanschot NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and Van Lanschot 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 Van Lanschot NV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of Van Lanschot i.e., Van Lanschot and ForFarmers go up and down completely randomly.

Pair Corralation between Van Lanschot and ForFarmers

Assuming the 90 days trading horizon Van Lanschot NV is expected to generate 0.97 times more return on investment than ForFarmers. However, Van Lanschot NV is 1.04 times less risky than ForFarmers. It trades about 0.34 of its potential returns per unit of risk. ForFarmers NV is currently generating about -0.03 per unit of risk. If you would invest  4,342  in Van Lanschot NV on April 22, 2025 and sell it today you would earn a total of  1,338  from holding Van Lanschot NV or generate 30.82% return on investment over 90 days.

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

Van Lanschot NV  vs.  ForFarmers NV

Van Lanschot NV

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Van Lanschot NV are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Van Lanschot unveiled solid returns over the last few months and may actually be approaching a breakup point.

ForFarmers NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ForFarmers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ForFarmers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Van Lanschot and ForFarmers

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

The idea behind Van Lanschot NV and ForFarmers 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.