Correlation Between COFACE SA and Everest Group
Can any of the company-specific risk be diversified away by investing in both COFACE SA and Everest Group 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 COFACE SA and Everest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFACE SA and Everest Group, you can compare the effects of market volatilities on COFACE SA and Everest Group 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 COFACE SA with a short position of Everest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFACE SA and Everest Group.
Diversification Opportunities for COFACE SA and Everest Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COFACE and Everest is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding COFACE SA and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group and COFACE SA 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 COFACE SA are associated (or correlated) with Everest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of COFACE SA i.e., COFACE SA and Everest Group go up and down completely randomly.
Pair Corralation between COFACE SA and Everest Group
Assuming the 90 days horizon COFACE SA is expected to under-perform the Everest Group. But the stock apears to be less risky and, when comparing its historical volatility, COFACE SA is 1.13 times less risky than Everest Group. The stock trades about -0.16 of its potential returns per unit of risk. The Everest Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 35,269 in Everest Group on September 23, 2024 and sell it today you would lose (1,849) from holding Everest Group or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COFACE SA vs. Everest Group
Performance |
| Timeline |
| COFACE SA |
| Everest Group |
COFACE SA and Everest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFACE SA and Everest Group
The main advantage of trading using opposite COFACE SA and Everest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFACE SA position performs unexpectedly, Everest Group 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 Everest Group will offset losses from the drop in Everest Group's long position.| COFACE SA vs. MUENCHRUECKUNSADR 110 | COFACE SA vs. Swiss Re AG | COFACE SA vs. HANNRUECKVSE ADR 12ON | COFACE SA vs. Everest Group |
| Everest Group vs. MUENCHRUECKUNSADR 110 | Everest Group vs. Swiss Re AG | Everest Group vs. HANNRUECKVSE ADR 12ON | Everest Group vs. Reinsurance Group of |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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