Correlation Between Societe Generale and Euroland Corporate
Can any of the company-specific risk be diversified away by investing in both Societe Generale and Euroland Corporate 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 Societe Generale and Euroland Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Societe Generale SA and Euroland Corporate SA, you can compare the effects of market volatilities on Societe Generale and Euroland Corporate 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 Societe Generale with a short position of Euroland Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Euroland Corporate.
Diversification Opportunities for Societe Generale and Euroland Corporate
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Societe and Euroland is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale SA and Euroland Corporate SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroland Corporate and Societe Generale 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 Societe Generale SA are associated (or correlated) with Euroland Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroland Corporate has no effect on the direction of Societe Generale i.e., Societe Generale and Euroland Corporate go up and down completely randomly.
Pair Corralation between Societe Generale and Euroland Corporate
Assuming the 90 days trading horizon Societe Generale is expected to generate 3.74 times less return on investment than Euroland Corporate. But when comparing it to its historical volatility, Societe Generale SA is 3.78 times less risky than Euroland Corporate. It trades about 0.03 of its potential returns per unit of risk. Euroland Corporate SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 272.00 in Euroland Corporate SA on August 26, 2024 and sell it today you would lose (16.00) from holding Euroland Corporate SA or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.17% |
| Values | Daily Returns |
Societe Generale SA vs. Euroland Corporate SA
Performance |
| Timeline |
| Societe Generale |
| Euroland Corporate |
Societe Generale and Euroland Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe Generale and Euroland Corporate
The main advantage of trading using opposite Societe Generale and Euroland Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale position performs unexpectedly, Euroland Corporate 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 Euroland Corporate will offset losses from the drop in Euroland Corporate's long position.| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. AXA SA | Societe Generale vs. Renault SA |
| Euroland Corporate vs. Stef SA | Euroland Corporate vs. NRJ Group | Euroland Corporate vs. Savencia SA | Euroland Corporate vs. ABC arbitrage SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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