Correlation Between Carmat SA and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Carmat SA and EDISON INTL 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 Carmat SA and EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and EDISON INTL, you can compare the effects of market volatilities on Carmat SA and EDISON INTL 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 Carmat SA with a short position of EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and EDISON INTL.
Diversification Opportunities for Carmat SA and EDISON INTL
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carmat and EDISON is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL and Carmat SA 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 Carmat SA are associated (or correlated) with EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Carmat SA i.e., Carmat SA and EDISON INTL go up and down completely randomly.
Pair Corralation between Carmat SA and EDISON INTL
Assuming the 90 days horizon Carmat SA is expected to under-perform the EDISON INTL. In addition to that, Carmat SA is 3.01 times more volatile than EDISON INTL. It trades about -0.21 of its total potential returns per unit of risk. EDISON INTL is currently generating about 0.27 per unit of volatility. If you would invest 7,576 in EDISON INTL on September 1, 2024 and sell it today you would earn a total of 748.00 from holding EDISON INTL or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat SA vs. EDISON INTL
Performance |
| Timeline |
| Carmat SA |
| EDISON INTL |
Carmat SA and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and EDISON INTL
The main advantage of trading using opposite Carmat SA and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| Carmat SA vs. National Retail Properties | Carmat SA vs. Sunstone Hotel Investors | Carmat SA vs. CARSALESCOM | Carmat SA vs. FAST RETAIL ADR |
| EDISON INTL vs. CARSALESCOM | EDISON INTL vs. ITALIAN WINE BRANDS | EDISON INTL vs. United Airlines Holdings | EDISON INTL vs. Nok Airlines PCL |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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