Correlation Between Thales SA and Capgemini
Can any of the company-specific risk be diversified away by investing in both Thales SA and Capgemini 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 Thales SA and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA and Capgemini SE, you can compare the effects of market volatilities on Thales SA and Capgemini 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 Thales SA with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Capgemini.
Diversification Opportunities for Thales SA and Capgemini
Excellent diversification
The 3 months correlation between Thales and Capgemini is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Thales SA 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 Thales SA are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Thales SA i.e., Thales SA and Capgemini go up and down completely randomly.
Pair Corralation between Thales SA and Capgemini
Assuming the 90 days horizon Thales SA is expected to generate 0.89 times more return on investment than Capgemini. However, Thales SA is 1.13 times less risky than Capgemini. It trades about -0.15 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.27 per unit of risk. If you would invest 15,195 in Thales SA on August 27, 2024 and sell it today you would lose (1,010) from holding Thales SA or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thales SA vs. Capgemini SE
Performance |
| Timeline |
| Thales SA |
| Capgemini SE |
Thales SA and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and Capgemini
The main advantage of trading using opposite Thales SA and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Thales SA vs. Safran SA | Thales SA vs. Dassault Systemes SE | Thales SA vs. Dassault Aviation SA | Thales SA vs. Vinci SA |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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