Correlation Between Solocal Group and Wendel
Can any of the company-specific risk be diversified away by investing in both Solocal Group and Wendel 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 Solocal Group and Wendel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solocal Group SA and Wendel, you can compare the effects of market volatilities on Solocal Group and Wendel 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 Solocal Group with a short position of Wendel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solocal Group and Wendel.
Diversification Opportunities for Solocal Group and Wendel
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solocal and Wendel is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Solocal Group SA and Wendel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wendel and Solocal Group 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 Solocal Group SA are associated (or correlated) with Wendel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wendel has no effect on the direction of Solocal Group i.e., Solocal Group and Wendel go up and down completely randomly.
Pair Corralation between Solocal Group and Wendel
Assuming the 90 days trading horizon Solocal Group SA is expected to generate 4.12 times more return on investment than Wendel. However, Solocal Group is 4.12 times more volatile than Wendel. It trades about 0.23 of its potential returns per unit of risk. Wendel is currently generating about 0.08 per unit of risk. If you would invest 240.00 in Solocal Group SA on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Solocal Group SA or generate 21.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solocal Group SA vs. Wendel
Performance |
| Timeline |
| Solocal Group SA |
| Wendel |
Solocal Group and Wendel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solocal Group and Wendel
The main advantage of trading using opposite Solocal Group and Wendel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solocal Group position performs unexpectedly, Wendel 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 Wendel will offset losses from the drop in Wendel's long position.| Solocal Group vs. Vallourec | Solocal Group vs. Genfit | Solocal Group vs. Innate Pharma | Solocal Group vs. Etablissements Maurel et |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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