Correlation Between Compagnie Plastic and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and US Bancorp 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 Compagnie Plastic and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and US Bancorp, you can compare the effects of market volatilities on Compagnie Plastic and US Bancorp 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 Compagnie Plastic with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and US Bancorp.
Diversification Opportunities for Compagnie Plastic and US Bancorp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compagnie and UB5 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and US Bancorp go up and down completely randomly.
Pair Corralation between Compagnie Plastic and US Bancorp
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to under-perform the US Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie Plastic Omnium is 1.01 times less risky than US Bancorp. The stock trades about -0.09 of its potential returns per unit of risk. The US Bancorp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,370 in US Bancorp on September 5, 2024 and sell it today you would earn a total of 635.00 from holding US Bancorp or generate 14.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. US Bancorp
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| US Bancorp |
Compagnie Plastic and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and US Bancorp
The main advantage of trading using opposite Compagnie Plastic and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings | Compagnie Plastic vs. Origin Agritech |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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