Correlation Between Becle SA and L’Oreal Co
Can any of the company-specific risk be diversified away by investing in both Becle SA and L’Oreal Co 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 Becle SA and L’Oreal Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Becle SA de and LOreal Co ADR, you can compare the effects of market volatilities on Becle SA and L’Oreal Co 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 Becle SA with a short position of L’Oreal Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becle SA and L’Oreal Co.
Diversification Opportunities for Becle SA and L’Oreal Co
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Becle and L’Oreal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Becle SA de and LOreal Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOreal Co ADR and Becle 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 Becle SA de are associated (or correlated) with L’Oreal Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOreal Co ADR has no effect on the direction of Becle SA i.e., Becle SA and L’Oreal Co go up and down completely randomly.
Pair Corralation between Becle SA and L’Oreal Co
Assuming the 90 days horizon Becle SA is expected to generate 1.28 times less return on investment than L’Oreal Co. In addition to that, Becle SA is 3.89 times more volatile than LOreal Co ADR. It trades about 0.08 of its total potential returns per unit of risk. LOreal Co ADR is currently generating about 0.38 per unit of volatility. If you would invest 7,048 in LOreal Co ADR on December 11, 2024 and sell it today you would earn a total of 791.00 from holding LOreal Co ADR or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Becle SA de vs. LOreal Co ADR
Performance |
| Timeline |
| Becle SA de |
| LOreal Co ADR |
Becle SA and L’Oreal Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Becle SA and L’Oreal Co
The main advantage of trading using opposite Becle SA and L’Oreal Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becle SA position performs unexpectedly, L’Oreal Co 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 L’Oreal Co will offset losses from the drop in L’Oreal Co's long position.| Becle SA vs. Aristocrat Group Corp | Becle SA vs. Iconic Brands | Becle SA vs. Naked Wines plc | Becle SA vs. Willamette Valley Vineyards |
| L’Oreal Co vs. Unilever PLC | L’Oreal Co vs. Estee Lauder Companies | L’Oreal Co vs. Church Dwight | L’Oreal Co vs. Mannatech Incorporated |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |