Correlation Between ESSILORLUXOTTICA and Bridgestone
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA and Bridgestone 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 Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and Bridgestone, you can compare the effects of market volatilities on ESSILORLUXOTTICA and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and Bridgestone.
Diversification Opportunities for ESSILORLUXOTTICA and Bridgestone
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESSILORLUXOTTICA and Bridgestone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 12ON are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and Bridgestone go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and Bridgestone
Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.77 times more return on investment than Bridgestone. However, ESSILORLUXOTTICA 12ON is 1.29 times less risky than Bridgestone. It trades about 0.25 of its potential returns per unit of risk. Bridgestone is currently generating about 0.11 per unit of risk. If you would invest 10,600 in ESSILORLUXOTTICA 12ON on September 1, 2024 and sell it today you would earn a total of 700.00 from holding ESSILORLUXOTTICA 12ON or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. Bridgestone
Performance |
| Timeline |
| ESSILORLUXOTTICA 12ON |
| Bridgestone |
ESSILORLUXOTTICA and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSILORLUXOTTICA and Bridgestone
The main advantage of trading using opposite ESSILORLUXOTTICA and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| ESSILORLUXOTTICA vs. SOFI TECHNOLOGIES | ESSILORLUXOTTICA vs. Amkor Technology | ESSILORLUXOTTICA vs. PLAYTIKA HOLDING DL 01 | ESSILORLUXOTTICA vs. ATRESMEDIA |
| Bridgestone vs. Sabra Health Care | Bridgestone vs. LIFENET INSURANCE CO | Bridgestone vs. Bumrungrad Hospital Public | Bridgestone vs. Cardinal Health |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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