Correlation Between Air France and Credit Agricole
Can any of the company-specific risk be diversified away by investing in both Air France and Credit Agricole 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 Air France and Credit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM SA and Credit Agricole SA, you can compare the effects of market volatilities on Air France and Credit Agricole 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 Air France with a short position of Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Credit Agricole.
Diversification Opportunities for Air France and Credit Agricole
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Credit is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole SA and Air France 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 Air France KLM SA are associated (or correlated) with Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole SA has no effect on the direction of Air France i.e., Air France and Credit Agricole go up and down completely randomly.
Pair Corralation between Air France and Credit Agricole
Assuming the 90 days horizon Air France KLM SA is expected to generate 2.69 times more return on investment than Credit Agricole. However, Air France is 2.69 times more volatile than Credit Agricole SA. It trades about 0.25 of its potential returns per unit of risk. Credit Agricole SA is currently generating about 0.58 per unit of risk. If you would invest 770.00 in Air France KLM SA on November 28, 2024 and sell it today you would earn a total of 89.00 from holding Air France KLM SA or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM SA vs. Credit Agricole SA
Performance |
| Timeline |
| Air France KLM |
| Credit Agricole SA |
Air France and Credit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Credit Agricole
The main advantage of trading using opposite Air France and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Credit Agricole 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 Credit Agricole will offset losses from the drop in Credit Agricole's long position.| Air France vs. CMG Cleantech SA | Air France vs. Sidetrade | Air France vs. FNP Technologies SA | Air France vs. Fill Up Media |
| Credit Agricole vs. Societe Generale SA | Credit Agricole vs. BNP Paribas SA | Credit Agricole vs. AXA SA | Credit Agricole vs. Orange 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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