Correlation Between CHRISTIAN DIOR and Compagnie Financière
Can any of the company-specific risk be diversified away by investing in both CHRISTIAN DIOR and Compagnie Financière 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 CHRISTIAN DIOR and Compagnie Financière into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHRISTIAN DIOR ADR14EO2 and Compagnie Financire Richemont, you can compare the effects of market volatilities on CHRISTIAN DIOR and Compagnie Financière 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 CHRISTIAN DIOR with a short position of Compagnie Financière. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRISTIAN DIOR and Compagnie Financière.
Diversification Opportunities for CHRISTIAN DIOR and Compagnie Financière
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHRISTIAN and Compagnie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CHRISTIAN DIOR ADR14EO2 and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financière and CHRISTIAN DIOR 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 CHRISTIAN DIOR ADR14EO2 are associated (or correlated) with Compagnie Financière. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financière has no effect on the direction of CHRISTIAN DIOR i.e., CHRISTIAN DIOR and Compagnie Financière go up and down completely randomly.
Pair Corralation between CHRISTIAN DIOR and Compagnie Financière
Assuming the 90 days trading horizon CHRISTIAN DIOR is expected to generate 10.95 times less return on investment than Compagnie Financière. But when comparing it to its historical volatility, CHRISTIAN DIOR ADR14EO2 is 1.2 times less risky than Compagnie Financière. It trades about 0.01 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Compagnie Financire Richemont on October 14, 2024 and sell it today you would earn a total of 140.00 from holding Compagnie Financire Richemont or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHRISTIAN DIOR ADR14EO2 vs. Compagnie Financire Richemont
Performance |
| Timeline |
| CHRISTIAN DIOR ADR14EO2 |
| Compagnie Financière |
CHRISTIAN DIOR and Compagnie Financière Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHRISTIAN DIOR and Compagnie Financière
The main advantage of trading using opposite CHRISTIAN DIOR and Compagnie Financière positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHRISTIAN DIOR position performs unexpectedly, Compagnie Financière 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 Compagnie Financière will offset losses from the drop in Compagnie Financière's long position.| CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. Christian Dior SE | CHRISTIAN DIOR vs. Compagnie Financire Richemont |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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