Correlation Between Alphabet and Société Générale
Can any of the company-specific risk be diversified away by investing in both Alphabet and Société Générale 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 Alphabet and Société Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Socit Gnrale Socit, you can compare the effects of market volatilities on Alphabet and Société Générale 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 Alphabet with a short position of Société Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Société Générale.
Diversification Opportunities for Alphabet and Société Générale
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alphabet and Société is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of Alphabet i.e., Alphabet and Société Générale go up and down completely randomly.
Pair Corralation between Alphabet and Société Générale
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.15 times more return on investment than Société Générale. However, Alphabet is 1.15 times more volatile than Socit Gnrale Socit. It trades about -0.02 of its potential returns per unit of risk. Socit Gnrale Socit is currently generating about -0.12 per unit of risk. If you would invest 17,269 in Alphabet Inc Class C on September 1, 2024 and sell it today you would lose (220.00) from holding Alphabet Inc Class C or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Socit Gnrale Socit
Performance |
| Timeline |
| Alphabet Class C |
| Socit Gnrale Socit |
Alphabet and Société Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Société Générale
The main advantage of trading using opposite Alphabet and Société Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Société Générale 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 Société Générale will offset losses from the drop in Société Générale's long position.The idea behind Alphabet Inc Class C and Socit Gnrale Socit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Société Générale vs. Constellation Software | Société Générale vs. Nippon Steel | Société Générale vs. ALGOMA STEEL GROUP | Société Générale vs. FORMPIPE SOFTWARE AB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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