Correlation Between Nexity and Compagnie
Can any of the company-specific risk be diversified away by investing in both Nexity and Compagnie 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 Nexity and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexity and Compagnie de Saint Gobain, you can compare the effects of market volatilities on Nexity and Compagnie 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 Nexity with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexity and Compagnie.
Diversification Opportunities for Nexity and Compagnie
Poor diversification
The 3 months correlation between Nexity and Compagnie is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and Nexity 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 Nexity are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Nexity i.e., Nexity and Compagnie go up and down completely randomly.
Pair Corralation between Nexity and Compagnie
Assuming the 90 days trading horizon Nexity is expected to under-perform the Compagnie. In addition to that, Nexity is 1.7 times more volatile than Compagnie de Saint Gobain. It trades about -0.05 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.21 per unit of volatility. If you would invest 8,188 in Compagnie de Saint Gobain on August 24, 2024 and sell it today you would earn a total of 602.00 from holding Compagnie de Saint Gobain or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexity vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Nexity |
| Compagnie de Saint |
Nexity and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexity and Compagnie
The main advantage of trading using opposite Nexity and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexity position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.The idea behind Nexity and Compagnie de Saint Gobain 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.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |