Correlation Between Essilor International and Retractable Technologies
Can any of the company-specific risk be diversified away by investing in both Essilor International and Retractable Technologies 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 Retractable Technologies 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 Retractable Technologies, you can compare the effects of market volatilities on Essilor International and Retractable Technologies 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 Retractable Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essilor International and Retractable Technologies.
Diversification Opportunities for Essilor International and Retractable Technologies
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Essilor and Retractable is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Retractable Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retractable Technologies 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 Retractable Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retractable Technologies has no effect on the direction of Essilor International i.e., Essilor International and Retractable Technologies go up and down completely randomly.
Pair Corralation between Essilor International and Retractable Technologies
Assuming the 90 days horizon Essilor International SA is expected to generate 0.36 times more return on investment than Retractable Technologies. However, Essilor International SA is 2.75 times less risky than Retractable Technologies. It trades about 0.15 of its potential returns per unit of risk. Retractable Technologies is currently generating about -0.21 per unit of risk. If you would invest 11,803 in Essilor International SA on August 28, 2024 and sell it today you would earn a total of 456.00 from holding Essilor International SA or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essilor International SA vs. Retractable Technologies
Performance |
| Timeline |
| Essilor International |
| Retractable Technologies |
Essilor International and Retractable Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essilor International and Retractable Technologies
The main advantage of trading using opposite Essilor International and Retractable Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essilor International position performs unexpectedly, Retractable Technologies 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 Retractable Technologies will offset losses from the drop in Retractable Technologies' long position.| Essilor International vs. Sysmex Corp | Essilor International vs. Straumann Holding AG | Essilor International vs. Coloplast AS | Essilor International vs. EssilorLuxottica Socit anonyme |
| Retractable Technologies vs. Milestone Scientific | Retractable Technologies vs. CarPartsCom | Retractable Technologies vs. OncoCyte Corp | Retractable Technologies vs. Alpha Pro Tech |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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