Correlation Between Capgemini and Safran SA
Can any of the company-specific risk be diversified away by investing in both Capgemini and Safran 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 Capgemini and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE and Safran SA, you can compare the effects of market volatilities on Capgemini and Safran 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 Capgemini with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Safran SA.
Diversification Opportunities for Capgemini and Safran SA
Excellent diversification
The 3 months correlation between Capgemini and Safran is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Capgemini 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 Capgemini SE are associated (or correlated) with Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Capgemini i.e., Capgemini and Safran SA go up and down completely randomly.
Pair Corralation between Capgemini and Safran SA
Assuming the 90 days trading horizon Capgemini SE is expected to under-perform the Safran SA. In addition to that, Capgemini is 1.59 times more volatile than Safran SA. It trades about -0.28 of its total potential returns per unit of risk. Safran SA is currently generating about 0.11 per unit of volatility. If you would invest 21,140 in Safran SA on August 28, 2024 and sell it today you would earn a total of 680.00 from holding Safran SA or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capgemini SE vs. Safran SA
Performance |
| Timeline |
| Capgemini SE |
| Safran SA |
Capgemini and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capgemini and Safran SA
The main advantage of trading using opposite Capgemini and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Safran 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 Safran SA will offset losses from the drop in Safran SA's long position.| Capgemini vs. Atos SE | Capgemini vs. Compagnie de Saint Gobain | Capgemini vs. Pernod Ricard SA | Capgemini vs. Bouygues SA |
| Safran SA vs. Thales SA | Safran SA vs. Vinci SA | Safran SA vs. Air Liquide SA | Safran SA vs. Dassault Systemes SE |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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