Correlation Between ESSILORLUXOTTICA and Grammer AG
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA and Grammer AG 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 Grammer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and Grammer AG, you can compare the effects of market volatilities on ESSILORLUXOTTICA and Grammer AG 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 Grammer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and Grammer AG.
Diversification Opportunities for ESSILORLUXOTTICA and Grammer AG
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ESSILORLUXOTTICA and Grammer is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and Grammer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grammer 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 12ON are associated (or correlated) with Grammer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grammer AG has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and Grammer AG go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and Grammer AG
Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.55 times more return on investment than Grammer AG. However, ESSILORLUXOTTICA 12ON is 1.82 times less risky than Grammer AG. It trades about 0.22 of its potential returns per unit of risk. Grammer AG is currently generating about -0.55 per unit of risk. If you would invest 10,800 in ESSILORLUXOTTICA 12ON on August 27, 2024 and sell it today you would earn a total of 600.00 from holding ESSILORLUXOTTICA 12ON or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. Grammer AG
Performance |
| Timeline |
| ESSILORLUXOTTICA 12ON |
| Grammer AG |
ESSILORLUXOTTICA and Grammer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSILORLUXOTTICA and Grammer AG
The main advantage of trading using opposite ESSILORLUXOTTICA and Grammer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA position performs unexpectedly, Grammer AG 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 Grammer AG will offset losses from the drop in Grammer AG's long position.| ESSILORLUXOTTICA vs. GALENA MINING LTD | ESSILORLUXOTTICA vs. Hollywood Bowl Group | ESSILORLUXOTTICA vs. Harmony Gold Mining | ESSILORLUXOTTICA vs. Calibre Mining Corp |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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