Correlation Between Mercialys and Fonciere Lyonnaise
Can any of the company-specific risk be diversified away by investing in both Mercialys and Fonciere Lyonnaise 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 Mercialys and Fonciere Lyonnaise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercialys SA and Fonciere Lyonnaise, you can compare the effects of market volatilities on Mercialys and Fonciere Lyonnaise 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 Mercialys with a short position of Fonciere Lyonnaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercialys and Fonciere Lyonnaise.
Diversification Opportunities for Mercialys and Fonciere Lyonnaise
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercialys and Fonciere is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mercialys SA and Fonciere Lyonnaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonciere Lyonnaise and Mercialys 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 Mercialys SA are associated (or correlated) with Fonciere Lyonnaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonciere Lyonnaise has no effect on the direction of Mercialys i.e., Mercialys and Fonciere Lyonnaise go up and down completely randomly.
Pair Corralation between Mercialys and Fonciere Lyonnaise
Assuming the 90 days trading horizon Mercialys SA is expected to generate 1.2 times more return on investment than Fonciere Lyonnaise. However, Mercialys is 1.2 times more volatile than Fonciere Lyonnaise. It trades about 0.04 of its potential returns per unit of risk. Fonciere Lyonnaise is currently generating about 0.0 per unit of risk. If you would invest 825.00 in Mercialys SA on August 31, 2024 and sell it today you would earn a total of 223.00 from holding Mercialys SA or generate 27.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Mercialys SA vs. Fonciere Lyonnaise
Performance |
| Timeline |
| Mercialys SA |
| Fonciere Lyonnaise |
Mercialys and Fonciere Lyonnaise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercialys and Fonciere Lyonnaise
The main advantage of trading using opposite Mercialys and Fonciere Lyonnaise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercialys position performs unexpectedly, Fonciere Lyonnaise 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 Fonciere Lyonnaise will offset losses from the drop in Fonciere Lyonnaise's long position.The idea behind Mercialys SA and Fonciere Lyonnaise 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.| Fonciere Lyonnaise vs. Gecina SA | Fonciere Lyonnaise vs. Icade SA | Fonciere Lyonnaise vs. Altarea SCA | Fonciere Lyonnaise vs. Mercialys 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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