Correlation Between CSL and Essilor International
Can any of the company-specific risk be diversified away by investing in both CSL and Essilor International 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 CSL and Essilor International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Essilor International SA, you can compare the effects of market volatilities on CSL and Essilor International 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 CSL with a short position of Essilor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Essilor International.
Diversification Opportunities for CSL and Essilor International
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSL and Essilor is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Essilor International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essilor International and CSL 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 CSL are associated (or correlated) with Essilor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essilor International has no effect on the direction of CSL i.e., CSL and Essilor International go up and down completely randomly.
Pair Corralation between CSL and Essilor International
Assuming the 90 days horizon CSL is expected to under-perform the Essilor International. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSL is 1.01 times less risky than Essilor International. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Essilor International SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10,031 in Essilor International SA on November 4, 2024 and sell it today you would earn a total of 3,677 from holding Essilor International SA or generate 36.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Essilor International SA
Performance |
| Timeline |
| CSL |
| Essilor International |
CSL and Essilor International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Essilor International
The main advantage of trading using opposite CSL and Essilor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Essilor International 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 Essilor International will offset losses from the drop in Essilor International's long position.| CSL vs. Novo Nordisk AS | CSL vs. ACELYRIN, INC Common | CSL vs. Caribou Biosciences | CSL vs. Molecular Partners AG |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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