Correlation Between LOreal SA and Emova Group
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Emova Group 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 LOreal SA and Emova Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Emova Group SA, you can compare the effects of market volatilities on LOreal SA and Emova Group 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 LOreal SA with a short position of Emova Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Emova Group.
Diversification Opportunities for LOreal SA and Emova Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between LOreal and Emova is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Emova Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emova Group SA and LOreal 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 LOreal SA are associated (or correlated) with Emova Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emova Group SA has no effect on the direction of LOreal SA i.e., LOreal SA and Emova Group go up and down completely randomly.
Pair Corralation between LOreal SA and Emova Group
Assuming the 90 days horizon LOreal SA is expected to generate 0.54 times more return on investment than Emova Group. However, LOreal SA is 1.86 times less risky than Emova Group. It trades about -0.08 of its potential returns per unit of risk. Emova Group SA is currently generating about -0.06 per unit of risk. If you would invest 36,355 in LOreal SA on December 1, 2024 and sell it today you would lose (1,055) from holding LOreal SA or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LOreal SA vs. Emova Group SA
Performance |
| Timeline |
| LOreal SA |
| Emova Group SA |
LOreal SA and Emova Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Emova Group
The main advantage of trading using opposite LOreal SA and Emova Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Emova Group 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 Emova Group will offset losses from the drop in Emova Group's long position.| LOreal SA vs. LVMH Mot Hennessy | LOreal SA vs. Danone SA | LOreal SA vs. Air Liquide SA | LOreal SA vs. Hermes International SCA |
| Emova Group vs. Claranova SE | Emova Group vs. Nextedia | Emova Group vs. Acheter Louer | Emova Group vs. Groupe Sfpi |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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