Correlation Between EssilorLuxottica and Olympus
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Olympus 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 Olympus 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 Olympus, you can compare the effects of market volatilities on EssilorLuxottica and Olympus 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 Olympus. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Olympus.
Diversification Opportunities for EssilorLuxottica and Olympus
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EssilorLuxottica and Olympus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Olympus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympus 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 Olympus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympus has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Olympus go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Olympus
Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to generate 0.76 times more return on investment than Olympus. However, EssilorLuxottica Socit anonyme is 1.31 times less risky than Olympus. It trades about 0.06 of its potential returns per unit of risk. Olympus is currently generating about 0.04 per unit of risk. If you would invest 18,865 in EssilorLuxottica Socit anonyme on August 29, 2024 and sell it today you would earn a total of 5,631 from holding EssilorLuxottica Socit anonyme or generate 29.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.17% |
| Values | Daily Returns |
EssilorLuxottica Socit anonyme vs. Olympus
Performance |
| Timeline |
| EssilorLuxottica Socit |
| Olympus |
EssilorLuxottica and Olympus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EssilorLuxottica and Olympus
The main advantage of trading using opposite EssilorLuxottica and Olympus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Olympus 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 Olympus will offset losses from the drop in Olympus' long position.| EssilorLuxottica vs. Coloplast A | EssilorLuxottica vs. Carl Zeiss Meditec | EssilorLuxottica vs. Carl Zeiss Meditec | EssilorLuxottica vs. Hoya Corp |
| Olympus vs. Essilor International SA | Olympus vs. West Pharmaceutical Services | Olympus vs. Coloplast A | Olympus vs. EssilorLuxottica Socit anonyme |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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