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
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSL and Essilor is -0.68. 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. In addition to that, CSL is 1.1 times more volatile than Essilor International SA. It trades about -0.14 of its total potential returns per unit of risk. Essilor International SA is currently generating about 0.18 per unit of volatility. If you would invest 11,612 in Essilor International SA on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Essilor International SA or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | 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.The idea behind CSL and Essilor International SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Essilor International vs. Sysmex Corp | Essilor International vs. Coloplast AS | Essilor International vs. EssilorLuxottica Socit anonyme | Essilor International vs. Coloplast A |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |