Correlation Between Charter Communications and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Eiffage SA 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 Charter Communications and Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Eiffage SA, you can compare the effects of market volatilities on Charter Communications and Eiffage SA 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 Charter Communications with a short position of Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Eiffage SA.
Diversification Opportunities for Charter Communications and Eiffage SA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charter and Eiffage is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of Charter Communications i.e., Charter Communications and Eiffage SA go up and down completely randomly.
Pair Corralation between Charter Communications and Eiffage SA
Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 1.91 times more return on investment than Eiffage SA. However, Charter Communications is 1.91 times more volatile than Eiffage SA. It trades about 0.01 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.01 per unit of risk. If you would invest 38,035 in Charter Communications Cl on August 30, 2024 and sell it today you would earn a total of 1,355 from holding Charter Communications Cl or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Charter Communications Cl vs. Eiffage SA
Performance |
| Timeline |
| Charter Communications |
| Eiffage SA |
Charter Communications and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Eiffage SA
The main advantage of trading using opposite Charter Communications and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Charter Communications vs. Lendinvest PLC | Charter Communications vs. Neometals | Charter Communications vs. Albion Technology General | Charter Communications vs. Jupiter Fund Management |
| Eiffage SA vs. Indutrade AB | Eiffage SA vs. LPKF Laser Electronics | Eiffage SA vs. TechnipFMC PLC | Eiffage SA vs. Allianz Technology Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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