Correlation Between EssilorLuxottica and Coloplast
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Coloplast 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 Coloplast 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 Coloplast A, you can compare the effects of market volatilities on EssilorLuxottica and Coloplast 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 Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Coloplast.
Diversification Opportunities for EssilorLuxottica and Coloplast
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EssilorLuxottica and Coloplast is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A 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 Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast A has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Coloplast go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Coloplast
Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to generate 1.18 times more return on investment than Coloplast. However, EssilorLuxottica is 1.18 times more volatile than Coloplast A. It trades about 0.03 of its potential returns per unit of risk. Coloplast A is currently generating about -0.1 per unit of risk. If you would invest 23,888 in EssilorLuxottica Socit anonyme on August 28, 2024 and sell it today you would earn a total of 162.00 from holding EssilorLuxottica Socit anonyme or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EssilorLuxottica Socit anonyme vs. Coloplast A
Performance |
| Timeline |
| EssilorLuxottica Socit |
| Coloplast A |
EssilorLuxottica and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EssilorLuxottica and Coloplast
The main advantage of trading using opposite EssilorLuxottica and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast's long position.| EssilorLuxottica vs. GlucoTrack | EssilorLuxottica vs. Sharps Technology | EssilorLuxottica vs. Utah Medical Products | EssilorLuxottica vs. Innovative Eyewear |
| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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