Correlation Between Dassault Systemes and Sage Group
Can any of the company-specific risk be diversified away by investing in both Dassault Systemes and Sage Group 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 Dassault Systemes and Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Systemes SE and Sage Group PLC, you can compare the effects of market volatilities on Dassault Systemes and Sage Group 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 Dassault Systemes with a short position of Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Sage Group.
Diversification Opportunities for Dassault Systemes and Sage Group
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dassault and Sage is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Sage Group go up and down completely randomly.
Pair Corralation between Dassault Systemes and Sage Group
Assuming the 90 days horizon Dassault Systemes is expected to generate 2.59 times less return on investment than Sage Group. But when comparing it to its historical volatility, Dassault Systemes SE is 2.21 times less risky than Sage Group. It trades about 0.21 of its potential returns per unit of risk. Sage Group PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,486 in Sage Group PLC on September 18, 2024 and sell it today you would earn a total of 1,121 from holding Sage Group PLC or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systemes SE vs. Sage Group PLC
Performance |
| Timeline |
| Dassault Systemes |
| Sage Group PLC |
Dassault Systemes and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systemes and Sage Group
The main advantage of trading using opposite Dassault Systemes and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.| Dassault Systemes vs. Sage Group PLC | Dassault Systemes vs. Xero Limited | Dassault Systemes vs. RenoWorks Software | Dassault Systemes vs. 01 Communique Laboratory |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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