Correlation Between Artea SA and Covivio SA
Can any of the company-specific risk be diversified away by investing in both Artea SA and Covivio 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 Artea SA and Covivio SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artea SA and Covivio SA, you can compare the effects of market volatilities on Artea SA and Covivio 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 Artea SA with a short position of Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artea SA and Covivio SA.
Diversification Opportunities for Artea SA and Covivio SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Artea and Covivio is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Artea SA and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA and Artea SA 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 Artea SA are associated (or correlated) with Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of Artea SA i.e., Artea SA and Covivio SA go up and down completely randomly.
Pair Corralation between Artea SA and Covivio SA
Assuming the 90 days trading horizon Artea SA is expected to under-perform the Covivio SA. In addition to that, Artea SA is 1.22 times more volatile than Covivio SA. It trades about -0.09 of its total potential returns per unit of risk. Covivio SA is currently generating about 0.04 per unit of volatility. If you would invest 4,218 in Covivio SA on September 12, 2024 and sell it today you would earn a total of 797.00 from holding Covivio SA or generate 18.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Artea SA vs. Covivio SA
Performance |
| Timeline |
| Artea SA |
| Covivio SA |
Artea SA and Covivio SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artea SA and Covivio SA
The main advantage of trading using opposite Artea SA and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artea SA position performs unexpectedly, Covivio 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 Covivio SA will offset losses from the drop in Covivio SA's long position.The idea behind Artea SA and Covivio SA 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.| Covivio SA vs. Gecina SA | Covivio SA vs. Icade SA | Covivio SA vs. Klepierre SA | Covivio SA vs. Mercialys 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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