Correlation Between Engie SA and Financiere Marjos
Can any of the company-specific risk be diversified away by investing in both Engie SA and Financiere Marjos 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 Engie SA and Financiere Marjos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA and Financiere Marjos SA, you can compare the effects of market volatilities on Engie SA and Financiere Marjos 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 Engie SA with a short position of Financiere Marjos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Financiere Marjos.
Diversification Opportunities for Engie SA and Financiere Marjos
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Engie and Financiere is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA and Financiere Marjos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiere Marjos and Engie 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 Engie SA are associated (or correlated) with Financiere Marjos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiere Marjos has no effect on the direction of Engie SA i.e., Engie SA and Financiere Marjos go up and down completely randomly.
Pair Corralation between Engie SA and Financiere Marjos
Assuming the 90 days trading horizon Engie SA is expected to under-perform the Financiere Marjos. But the stock apears to be less risky and, when comparing its historical volatility, Engie SA is 7.19 times less risky than Financiere Marjos. The stock trades about -0.18 of its potential returns per unit of risk. The Financiere Marjos SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7.60 in Financiere Marjos SA on August 31, 2024 and sell it today you would earn a total of 2.40 from holding Financiere Marjos SA or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie SA vs. Financiere Marjos SA
Performance |
| Timeline |
| Engie SA |
| Financiere Marjos |
Engie SA and Financiere Marjos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and Financiere Marjos
The main advantage of trading using opposite Engie SA and Financiere Marjos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA position performs unexpectedly, Financiere Marjos 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 Financiere Marjos will offset losses from the drop in Financiere Marjos' long position.| Engie SA vs. Orange SA | Engie SA vs. Veolia Environnement VE | Engie SA vs. AXA SA | Engie SA vs. TotalEnergies SE |
| Financiere Marjos vs. Fiducial Office Solutions | Financiere Marjos vs. Foncire Euris SA | Financiere Marjos vs. Bernard Loisea | Financiere Marjos vs. Coheris SA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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