Correlation Between Alphabet and COFACE SA
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and COFACE SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Class A and COFACE SA, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of COFACE SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and COFACE SA.
Diversification Opportunities for Alphabet and COFACE SA
Pay attention - limited upside
The 3 months correlation between Alphabet and COFACE is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Class A and COFACE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFACE SA and Alphabet 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 Alphabet Class A 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 Alphabet i.e., Alphabet and COFACE SA go up and down completely randomly.
Pair Corralation between Alphabet and COFACE SA
Assuming the 90 days trading horizon Alphabet Class A is expected to generate 0.94 times more return on investment than COFACE SA. However, Alphabet Class A is 1.06 times less risky than COFACE SA. It trades about 0.07 of its potential returns per unit of risk. COFACE SA is currently generating about 0.02 per unit of risk. If you would invest 15,426 in Alphabet Class A on September 24, 2024 and sell it today you would earn a total of 2,900 from holding Alphabet Class A or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Class A vs. COFACE SA
Performance |
| Timeline |
| Alphabet Class A |
| COFACE SA |
Alphabet and COFACE SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and COFACE SA
The main advantage of trading using opposite Alphabet and COFACE SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.| Alphabet vs. Alphabet Class A | Alphabet vs. Alphabet | Alphabet vs. Meta Platforms | Alphabet vs. Tencent Holdings Ltd |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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