Correlation Between NYSE Composite and Capgemini
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Capgemini 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 NYSE Composite and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Capgemini SE ADR, you can compare the effects of market volatilities on NYSE Composite and Capgemini 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 NYSE Composite with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Capgemini.
Diversification Opportunities for NYSE Composite and Capgemini
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Capgemini is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Capgemini SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE ADR and NYSE Composite 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 NYSE Composite are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and Capgemini go up and down completely randomly.
Pair Corralation between NYSE Composite and Capgemini
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than Capgemini. However, NYSE Composite is 3.53 times less risky than Capgemini. It trades about 0.13 of its potential returns per unit of risk. Capgemini SE ADR is currently generating about -0.35 per unit of risk. If you would invest 1,959,424 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 37,406 from holding NYSE Composite or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Capgemini SE ADR
Performance |
| Timeline |
NYSE Composite and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Capgemini SE ADR
Pair trading matchups for Capgemini
Pair Trading with NYSE Composite and Capgemini
The main advantage of trading using opposite NYSE Composite and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Capgemini vs. Soluna Holdings Preferred | Capgemini vs. Crypto Co | Capgemini vs. ASGN Inc | Capgemini vs. Soluna Holdings |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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