Correlation Between Essilor International and Alcon AG
Can any of the company-specific risk be diversified away by investing in both Essilor International and Alcon 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 Essilor International and Alcon AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essilor International SA and Alcon AG, you can compare the effects of market volatilities on Essilor International and Alcon 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 Essilor International with a short position of Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essilor International and Alcon AG.
Diversification Opportunities for Essilor International and Alcon AG
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Essilor and Alcon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and Essilor International 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 Essilor International SA are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Essilor International i.e., Essilor International and Alcon AG go up and down completely randomly.
Pair Corralation between Essilor International and Alcon AG
Assuming the 90 days horizon Essilor International SA is expected to generate 0.88 times more return on investment than Alcon AG. However, Essilor International SA is 1.13 times less risky than Alcon AG. It trades about 0.07 of its potential returns per unit of risk. Alcon AG is currently generating about 0.04 per unit of risk. If you would invest 9,082 in Essilor International SA on November 2, 2024 and sell it today you would earn a total of 4,711 from holding Essilor International SA or generate 51.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essilor International SA vs. Alcon AG
Performance |
| Timeline |
| Essilor International |
| Alcon AG |
Essilor International and Alcon AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essilor International and Alcon AG
The main advantage of trading using opposite Essilor International and Alcon AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essilor International position performs unexpectedly, Alcon 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 Alcon AG will offset losses from the drop in Alcon AG's long position.| Essilor International vs. Sysmex Corp | Essilor International vs. Straumann Holding AG | Essilor International vs. Coloplast AS | Essilor International vs. EssilorLuxottica Socit anonyme |
| Alcon AG vs. Teleflex Incorporated | Alcon AG vs. West Pharmaceutical Services | Alcon AG vs. ResMed Inc | Alcon AG vs. ICU Medical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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