Correlation Between Farmers and Societe Generale
Can any of the company-specific risk be diversified away by investing in both Farmers and Societe Generale 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 Farmers and Societe Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers And Merchants and Societe Generale ADR, you can compare the effects of market volatilities on Farmers and Societe Generale 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 Farmers with a short position of Societe Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers and Societe Generale.
Diversification Opportunities for Farmers and Societe Generale
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmers and Societe is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Farmers And Merchants and Societe Generale ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe Generale ADR and Farmers 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 Farmers And Merchants are associated (or correlated) with Societe Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe Generale ADR has no effect on the direction of Farmers i.e., Farmers and Societe Generale go up and down completely randomly.
Pair Corralation between Farmers and Societe Generale
Given the investment horizon of 90 days Farmers is expected to generate 4.33 times less return on investment than Societe Generale. But when comparing it to its historical volatility, Farmers And Merchants is 4.61 times less risky than Societe Generale. It trades about 0.14 of its potential returns per unit of risk. Societe Generale ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Societe Generale ADR on August 24, 2024 and sell it today you would earn a total of 39.00 from holding Societe Generale ADR or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers And Merchants vs. Societe Generale ADR
Performance |
| Timeline |
| Farmers And Merchants |
| Societe Generale ADR |
Farmers and Societe Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers and Societe Generale
The main advantage of trading using opposite Farmers and Societe Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers position performs unexpectedly, Societe Generale 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 Societe Generale will offset losses from the drop in Societe Generale's long position.| Farmers vs. Pioneer Floating Rate | Farmers vs. The Gabelli Equity | Farmers vs. Pioneer Municipal High | Farmers vs. Nuveen Global High |
| Societe Generale vs. Pioneer Floating Rate | Societe Generale vs. The Gabelli Equity | Societe Generale vs. Pioneer Municipal High | Societe Generale vs. Nuveen Global High |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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