Correlation Between EssilorLuxottica and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Gerresheimer 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 EssilorLuxottica and Gerresheimer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EssilorLuxottica Socit anonyme and Gerresheimer AG, you can compare the effects of market volatilities on EssilorLuxottica and Gerresheimer 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 EssilorLuxottica with a short position of Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Gerresheimer.
Diversification Opportunities for EssilorLuxottica and Gerresheimer
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EssilorLuxottica and Gerresheimer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG and EssilorLuxottica 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 EssilorLuxottica Socit anonyme are associated (or correlated) with Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Gerresheimer go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Gerresheimer
Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to generate 0.71 times more return on investment than Gerresheimer. However, EssilorLuxottica Socit anonyme is 1.41 times less risky than Gerresheimer. It trades about 0.21 of its potential returns per unit of risk. Gerresheimer AG is currently generating about -0.19 per unit of risk. If you would invest 21,600 in EssilorLuxottica Socit anonyme on August 30, 2024 and sell it today you would earn a total of 1,460 from holding EssilorLuxottica Socit anonyme or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EssilorLuxottica Socit anonyme vs. Gerresheimer AG
Performance |
| Timeline |
| EssilorLuxottica Socit |
| Gerresheimer AG |
EssilorLuxottica and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EssilorLuxottica and Gerresheimer
The main advantage of trading using opposite EssilorLuxottica and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| EssilorLuxottica vs. X FAB Silicon Foundries | EssilorLuxottica vs. BLUESCOPE STEEL | EssilorLuxottica vs. Casio Computer CoLtd | EssilorLuxottica vs. RELIANCE STEEL AL |
| Gerresheimer vs. HOYA Corporation | Gerresheimer vs. Superior Plus Corp | Gerresheimer vs. NMI Holdings | Gerresheimer vs. SIVERS SEMICONDUCTORS AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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