Correlation Between Dassault Systemes and Capgemini
Can any of the company-specific risk be diversified away by investing in both Dassault Systemes and Capgemini 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 Capgemini 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 Capgemini SE, you can compare the effects of market volatilities on Dassault Systemes and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Capgemini.
Diversification Opportunities for Dassault Systemes and Capgemini
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dassault and Capgemini is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Capgemini go up and down completely randomly.
Pair Corralation between Dassault Systemes and Capgemini
Assuming the 90 days trading horizon Dassault Systemes SE is expected to generate 0.66 times more return on investment than Capgemini. However, Dassault Systemes SE is 1.51 times less risky than Capgemini. It trades about 0.12 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.27 per unit of risk. If you would invest 3,181 in Dassault Systemes SE on August 27, 2024 and sell it today you would earn a total of 118.00 from holding Dassault Systemes SE or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systemes SE vs. Capgemini SE
Performance |
| Timeline |
| Dassault Systemes |
| Capgemini SE |
Dassault Systemes and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systemes and Capgemini
The main advantage of trading using opposite Dassault Systemes and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Dassault Systemes vs. Thales SA | Dassault Systemes vs. Safran SA | Dassault Systemes vs. Air Liquide SA | Dassault Systemes vs. Capgemini SE |
| Capgemini vs. Neurones | Capgemini vs. Alten SA | Capgemini vs. Manitou BF SA | Capgemini vs. Ossiam Minimum Variance |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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