Correlation Between Bridgestone Corp and Compagnie Générale
Can any of the company-specific risk be diversified away by investing in both Bridgestone Corp and Compagnie Générale 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 Bridgestone Corp and Compagnie Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone Corp ADR and Compagnie Gnrale des, you can compare the effects of market volatilities on Bridgestone Corp and Compagnie Générale 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 Bridgestone Corp with a short position of Compagnie Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone Corp and Compagnie Générale.
Diversification Opportunities for Bridgestone Corp and Compagnie Générale
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bridgestone and Compagnie is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone Corp ADR and Compagnie Gnrale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Gnrale des and Bridgestone Corp 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 Bridgestone Corp ADR are associated (or correlated) with Compagnie Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Gnrale des has no effect on the direction of Bridgestone Corp i.e., Bridgestone Corp and Compagnie Générale go up and down completely randomly.
Pair Corralation between Bridgestone Corp and Compagnie Générale
Assuming the 90 days horizon Bridgestone Corp ADR is expected to generate 0.53 times more return on investment than Compagnie Générale. However, Bridgestone Corp ADR is 1.9 times less risky than Compagnie Générale. It trades about 0.2 of its potential returns per unit of risk. Compagnie Gnrale des is currently generating about 0.09 per unit of risk. If you would invest 1,679 in Bridgestone Corp ADR on November 3, 2024 and sell it today you would earn a total of 111.00 from holding Bridgestone Corp ADR or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bridgestone Corp ADR vs. Compagnie Gnrale des
Performance |
| Timeline |
| Bridgestone Corp ADR |
| Compagnie Gnrale des |
Bridgestone Corp and Compagnie Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone Corp and Compagnie Générale
The main advantage of trading using opposite Bridgestone Corp and Compagnie Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone Corp position performs unexpectedly, Compagnie Générale 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 Compagnie Générale will offset losses from the drop in Compagnie Générale's long position.| Bridgestone Corp vs. Continental AG PK | Bridgestone Corp vs. Compagnie Generale des | Bridgestone Corp vs. Denso Corp ADR | Bridgestone Corp vs. Subaru Corp ADR |
| Compagnie Générale vs. Continental AG PK | Compagnie Générale vs. Bridgestone Corp ADR | Compagnie Générale vs. Continental Aktiengesellschaft | Compagnie Générale vs. Douglas Dynamics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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