Correlation Between Elis SA and Fnac Darty
Can any of the company-specific risk be diversified away by investing in both Elis SA and Fnac Darty 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 Elis SA and Fnac Darty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elis SA and Fnac Darty SA, you can compare the effects of market volatilities on Elis SA and Fnac Darty 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 Elis SA with a short position of Fnac Darty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Fnac Darty.
Diversification Opportunities for Elis SA and Fnac Darty
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elis and Fnac is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Fnac Darty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fnac Darty SA and Elis 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 Elis SA are associated (or correlated) with Fnac Darty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fnac Darty SA has no effect on the direction of Elis SA i.e., Elis SA and Fnac Darty go up and down completely randomly.
Pair Corralation between Elis SA and Fnac Darty
Assuming the 90 days trading horizon Elis SA is expected to under-perform the Fnac Darty. But the stock apears to be less risky and, when comparing its historical volatility, Elis SA is 1.47 times less risky than Fnac Darty. The stock trades about -0.23 of its potential returns per unit of risk. The Fnac Darty SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,570 in Fnac Darty SA on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Fnac Darty SA or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elis SA vs. Fnac Darty SA
Performance |
| Timeline |
| Elis SA |
| Fnac Darty SA |
Elis SA and Fnac Darty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elis SA and Fnac Darty
The main advantage of trading using opposite Elis SA and Fnac Darty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis SA position performs unexpectedly, Fnac Darty 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 Fnac Darty will offset losses from the drop in Fnac Darty's long position.The idea behind Elis SA and Fnac Darty 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.| Fnac Darty vs. Vente Unique | Fnac Darty vs. Groupe Sfpi | Fnac Darty vs. Cegedim SA | Fnac Darty vs. SA Catana Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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