Correlation Between Air Liquide and Vinci SA
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Vinci 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 Air Liquide and Vinci SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Liquide SA and Vinci SA, you can compare the effects of market volatilities on Air Liquide and Vinci 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 Air Liquide with a short position of Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Vinci SA.
Diversification Opportunities for Air Liquide and Vinci SA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Vinci is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA and Air Liquide 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 Liquide SA are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Air Liquide i.e., Air Liquide and Vinci SA go up and down completely randomly.
Pair Corralation between Air Liquide and Vinci SA
Assuming the 90 days horizon Air Liquide SA is expected to generate 1.0 times more return on investment than Vinci SA. However, Air Liquide SA is 1.0 times less risky than Vinci SA. It trades about 0.04 of its potential returns per unit of risk. Vinci SA is currently generating about 0.0 per unit of risk. If you would invest 14,137 in Air Liquide SA on August 27, 2024 and sell it today you would earn a total of 1,887 from holding Air Liquide SA or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Vinci SA
Performance |
| Timeline |
| Air Liquide SA |
| Vinci SA |
Air Liquide and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Vinci SA
The main advantage of trading using opposite Air Liquide and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Vinci 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 Vinci SA will offset losses from the drop in Vinci SA's long position.| Air Liquide vs. Sanofi SA | Air Liquide vs. LOreal SA | Air Liquide vs. Vinci SA | Air Liquide vs. Schneider Electric SE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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