Correlation Between Euronext and Vinci SA
Can any of the company-specific risk be diversified away by investing in both Euronext and Vinci SA 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 Euronext and Vinci SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronext NV and Vinci SA, you can compare the effects of market volatilities on Euronext and Vinci SA 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 Euronext with a short position of Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Vinci SA.
Diversification Opportunities for Euronext and Vinci SA
Very good diversification
The 3 months correlation between Euronext and Vinci is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA and Euronext 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 Euronext NV are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Euronext i.e., Euronext and Vinci SA go up and down completely randomly.
Pair Corralation between Euronext and Vinci SA
Assuming the 90 days trading horizon Euronext NV is expected to generate 0.91 times more return on investment than Vinci SA. However, Euronext NV is 1.09 times less risky than Vinci SA. It trades about 0.13 of its potential returns per unit of risk. Vinci SA is currently generating about -0.07 per unit of risk. If you would invest 9,725 in Euronext NV on August 28, 2024 and sell it today you would earn a total of 915.00 from holding Euronext NV or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euronext NV vs. Vinci SA
Performance |
| Timeline |
| Euronext NV |
| Vinci SA |
Euronext and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronext and Vinci SA
The main advantage of trading using opposite Euronext and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronext position performs unexpectedly, Vinci SA 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 Vinci SA will offset losses from the drop in Vinci SA's long position.| Euronext vs. Caisse rgionale de | Euronext vs. Caisse Regionale de | Euronext vs. Manitou BF SA | Euronext 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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