Correlation Between Credit Agricole and Reworld Media
Can any of the company-specific risk be diversified away by investing in both Credit Agricole and Reworld Media 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 Credit Agricole and Reworld Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Agricole SA and Reworld Media, you can compare the effects of market volatilities on Credit Agricole and Reworld Media 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 Credit Agricole with a short position of Reworld Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Reworld Media.
Diversification Opportunities for Credit Agricole and Reworld Media
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Credit and Reworld is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and Reworld Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reworld Media and Credit Agricole 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 Credit Agricole SA are associated (or correlated) with Reworld Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reworld Media has no effect on the direction of Credit Agricole i.e., Credit Agricole and Reworld Media go up and down completely randomly.
Pair Corralation between Credit Agricole and Reworld Media
Assuming the 90 days trading horizon Credit Agricole SA is expected to generate 0.29 times more return on investment than Reworld Media. However, Credit Agricole SA is 3.49 times less risky than Reworld Media. It trades about 0.5 of its potential returns per unit of risk. Reworld Media is currently generating about -0.2 per unit of risk. If you would invest 1,303 in Credit Agricole SA on October 23, 2024 and sell it today you would earn a total of 114.00 from holding Credit Agricole SA or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Credit Agricole SA vs. Reworld Media
Performance |
| Timeline |
| Credit Agricole SA |
| Reworld Media |
Credit Agricole and Reworld Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Agricole and Reworld Media
The main advantage of trading using opposite Credit Agricole and Reworld Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Agricole position performs unexpectedly, Reworld Media 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 Reworld Media will offset losses from the drop in Reworld Media's long position.| Credit Agricole vs. Societe Generale SA | Credit Agricole vs. BNP Paribas SA | Credit Agricole vs. AXA SA | Credit Agricole vs. Orange SA |
| Reworld Media vs. Gaztransport Technigaz SAS | Reworld Media vs. Hoteles Bestprice SA | Reworld Media vs. Soditech SA | Reworld Media vs. Credit Agricole SA |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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