Correlation Between Ansell and EssilorLuxottica
Can any of the company-specific risk be diversified away by investing in both Ansell and EssilorLuxottica 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 Ansell and EssilorLuxottica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ansell Ltd ADR and EssilorLuxottica Socit anonyme, you can compare the effects of market volatilities on Ansell and EssilorLuxottica 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 Ansell with a short position of EssilorLuxottica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ansell and EssilorLuxottica.
Diversification Opportunities for Ansell and EssilorLuxottica
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ansell and EssilorLuxottica is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Ltd ADR and EssilorLuxottica Socit anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica Socit and Ansell 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 Ansell Ltd ADR are associated (or correlated) with EssilorLuxottica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EssilorLuxottica Socit has no effect on the direction of Ansell i.e., Ansell and EssilorLuxottica go up and down completely randomly.
Pair Corralation between Ansell and EssilorLuxottica
If you would invest 19,181 in EssilorLuxottica Socit anonyme on November 2, 2024 and sell it today you would earn a total of 8,319 from holding EssilorLuxottica Socit anonyme or generate 43.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Ansell Ltd ADR vs. EssilorLuxottica Socit anonyme
Performance |
| Timeline |
| Ansell Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EssilorLuxottica Socit |
Ansell and EssilorLuxottica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ansell and EssilorLuxottica
The main advantage of trading using opposite Ansell and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ansell position performs unexpectedly, EssilorLuxottica 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 EssilorLuxottica will offset losses from the drop in EssilorLuxottica's long position.The idea behind Ansell Ltd ADR and EssilorLuxottica Socit anonyme 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.| EssilorLuxottica vs. Coloplast A | EssilorLuxottica vs. Carl Zeiss Meditec | EssilorLuxottica vs. Carl Zeiss Meditec | EssilorLuxottica vs. Hoya Corp |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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