Correlation Between Imerys SA and Granite 3x
Can any of the company-specific risk be diversified away by investing in both Imerys SA and Granite 3x 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 Imerys SA and Granite 3x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imerys SA and Granite 3x LVMH, you can compare the effects of market volatilities on Imerys SA and Granite 3x 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 Imerys SA with a short position of Granite 3x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imerys SA and Granite 3x.
Diversification Opportunities for Imerys SA and Granite 3x
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Imerys and Granite is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Imerys SA and Granite 3x LVMH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite 3x LVMH and Imerys 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 Imerys SA are associated (or correlated) with Granite 3x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite 3x LVMH has no effect on the direction of Imerys SA i.e., Imerys SA and Granite 3x go up and down completely randomly.
Pair Corralation between Imerys SA and Granite 3x
Assuming the 90 days horizon Imerys SA is expected to generate 0.3 times more return on investment than Granite 3x. However, Imerys SA is 3.29 times less risky than Granite 3x. It trades about -0.01 of its potential returns per unit of risk. Granite 3x LVMH is currently generating about -0.06 per unit of risk. If you would invest 3,314 in Imerys SA on August 31, 2024 and sell it today you would lose (484.00) from holding Imerys SA or give up 14.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.55% |
| Values | Daily Returns |
Imerys SA vs. Granite 3x LVMH
Performance |
| Timeline |
| Imerys SA |
| Granite 3x LVMH |
Imerys SA and Granite 3x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imerys SA and Granite 3x
The main advantage of trading using opposite Imerys SA and Granite 3x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imerys SA position performs unexpectedly, Granite 3x 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 Granite 3x will offset losses from the drop in Granite 3x's long position.| Imerys SA vs. Rubis SCA | Imerys SA vs. Eramet SA | Imerys SA vs. Nexity | Imerys SA vs. Compagnie de Saint Gobain |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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