Correlation Between Carrefour and Elis SA
Can any of the company-specific risk be diversified away by investing in both Carrefour and Elis 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 Carrefour and Elis SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA and Elis SA, you can compare the effects of market volatilities on Carrefour and Elis 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 Carrefour with a short position of Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and Elis SA.
Diversification Opportunities for Carrefour and Elis SA
Very poor diversification
The 3 months correlation between Carrefour and Elis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and Carrefour 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 Carrefour SA are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Carrefour i.e., Carrefour and Elis SA go up and down completely randomly.
Pair Corralation between Carrefour and Elis SA
Assuming the 90 days horizon Carrefour SA is expected to under-perform the Elis SA. But the stock apears to be less risky and, when comparing its historical volatility, Carrefour SA is 1.21 times less risky than Elis SA. The stock trades about -0.02 of its potential returns per unit of risk. The Elis SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Elis SA on October 23, 2024 and sell it today you would earn a total of 402.00 from holding Elis SA or generate 25.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrefour SA vs. Elis SA
Performance |
| Timeline |
| Carrefour SA |
| Elis SA |
Carrefour and Elis SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and Elis SA
The main advantage of trading using opposite Carrefour and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, Elis 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 Elis SA will offset losses from the drop in Elis SA's long position.| Carrefour vs. Danone SA | Carrefour vs. Renault SA | Carrefour vs. AXA SA | Carrefour vs. Compagnie de Saint Gobain |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |