Correlation Between Floridienne and Compagnie
Can any of the company-specific risk be diversified away by investing in both Floridienne and Compagnie 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 Floridienne and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floridienne and Compagnie du Bois, you can compare the effects of market volatilities on Floridienne and Compagnie 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 Floridienne with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floridienne and Compagnie.
Diversification Opportunities for Floridienne and Compagnie
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floridienne and Compagnie is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne and Compagnie du Bois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Bois and Floridienne 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 Floridienne are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Bois has no effect on the direction of Floridienne i.e., Floridienne and Compagnie go up and down completely randomly.
Pair Corralation between Floridienne and Compagnie
Assuming the 90 days trading horizon Floridienne is expected to generate 1.47 times more return on investment than Compagnie. However, Floridienne is 1.47 times more volatile than Compagnie du Bois. It trades about -0.03 of its potential returns per unit of risk. Compagnie du Bois is currently generating about -0.06 per unit of risk. If you would invest 78,603 in Floridienne on August 31, 2024 and sell it today you would lose (22,603) from holding Floridienne or give up 28.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floridienne vs. Compagnie du Bois
Performance |
| Timeline |
| Floridienne |
| Compagnie du Bois |
Floridienne and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floridienne and Compagnie
The main advantage of trading using opposite Floridienne and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floridienne position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
| Compagnie vs. Brederode SA | Compagnie vs. GIMV NV | Compagnie vs. Ackermans Van Haaren | Compagnie vs. Groep Brussel Lambert |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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