Correlation Between Compagnie Generale and Bridgestone Corp
Can any of the company-specific risk be diversified away by investing in both Compagnie Generale and Bridgestone Corp 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 Compagnie Generale and Bridgestone Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Generale des and Bridgestone Corp ADR, you can compare the effects of market volatilities on Compagnie Generale and Bridgestone Corp 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 Compagnie Generale with a short position of Bridgestone Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Generale and Bridgestone Corp.
Diversification Opportunities for Compagnie Generale and Bridgestone Corp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compagnie and Bridgestone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Bridgestone Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone Corp ADR and Compagnie 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 Compagnie Generale des are associated (or correlated) with Bridgestone Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone Corp ADR has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and Bridgestone Corp go up and down completely randomly.
Pair Corralation between Compagnie Generale and Bridgestone Corp
Assuming the 90 days horizon Compagnie Generale des is expected to generate 1.16 times more return on investment than Bridgestone Corp. However, Compagnie Generale is 1.16 times more volatile than Bridgestone Corp ADR. It trades about 0.04 of its potential returns per unit of risk. Bridgestone Corp ADR is currently generating about 0.01 per unit of risk. If you would invest 1,296 in Compagnie Generale des on August 30, 2024 and sell it today you would earn a total of 325.00 from holding Compagnie Generale des or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Generale des vs. Bridgestone Corp ADR
Performance |
| Timeline |
| Compagnie Generale des |
| Bridgestone Corp ADR |
Compagnie Generale and Bridgestone Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Generale and Bridgestone Corp
The main advantage of trading using opposite Compagnie Generale and Bridgestone Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Generale position performs unexpectedly, Bridgestone Corp 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 Bridgestone Corp will offset losses from the drop in Bridgestone Corp's long position.| Compagnie Generale vs. Allison Transmission Holdings | Compagnie Generale vs. Luminar Technologies | Compagnie Generale vs. Lear Corporation | Compagnie Generale vs. BorgWarner |
| Bridgestone Corp vs. Continental AG PK | Bridgestone Corp vs. Compagnie Generale des | Bridgestone Corp vs. Denso Corp ADR | Bridgestone Corp vs. Subaru Corp ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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