Correlation Between LIFE + and COFACE SA
Can any of the company-specific risk be diversified away by investing in both LIFE + and COFACE 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 LIFE + and COFACE SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and COFACE SA, you can compare the effects of market volatilities on LIFE + and COFACE 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 LIFE + with a short position of COFACE SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and COFACE SA.
Diversification Opportunities for LIFE + and COFACE SA
Very good diversification
The 3 months correlation between LIFE and COFACE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and COFACE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFACE SA and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with COFACE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFACE SA has no effect on the direction of LIFE + i.e., LIFE + and COFACE SA go up and down completely randomly.
Pair Corralation between LIFE + and COFACE SA
Assuming the 90 days horizon LIFE BANC SPLIT is expected to generate 1.72 times more return on investment than COFACE SA. However, LIFE + is 1.72 times more volatile than COFACE SA. It trades about 0.05 of its potential returns per unit of risk. COFACE SA is currently generating about 0.02 per unit of risk. If you would invest 464.00 in LIFE BANC SPLIT on September 24, 2024 and sell it today you would earn a total of 101.00 from holding LIFE BANC SPLIT or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFE BANC SPLIT vs. COFACE SA
Performance |
| Timeline |
| LIFE BANC SPLIT |
| COFACE SA |
LIFE + and COFACE SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE + and COFACE SA
The main advantage of trading using opposite LIFE + and COFACE SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + position performs unexpectedly, COFACE 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 COFACE SA will offset losses from the drop in COFACE SA's long position.The idea behind LIFE BANC SPLIT and COFACE SA 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.| COFACE SA vs. Sterling Construction | COFACE SA vs. SENECA FOODS A | COFACE SA vs. National Beverage Corp | COFACE SA vs. Dairy Farm International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Correlations Find global opportunities by holding instruments from different markets |