Correlation Between LOreal SA and Entreprendre
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Entreprendre 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 Entreprendre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Entreprendre, you can compare the effects of market volatilities on LOreal SA and Entreprendre 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 Entreprendre. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Entreprendre.
Diversification Opportunities for LOreal SA and Entreprendre
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LOreal and Entreprendre is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Entreprendre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entreprendre 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 Entreprendre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entreprendre has no effect on the direction of LOreal SA i.e., LOreal SA and Entreprendre go up and down completely randomly.
Pair Corralation between LOreal SA and Entreprendre
Assuming the 90 days horizon LOreal SA is expected to under-perform the Entreprendre. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 1.39 times less risky than Entreprendre. The stock trades about -0.15 of its potential returns per unit of risk. The Entreprendre is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 300.00 in Entreprendre on August 29, 2024 and sell it today you would earn a total of 144.00 from holding Entreprendre or generate 48.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
LOreal SA vs. Entreprendre
Performance |
| Timeline |
| LOreal SA |
| Entreprendre |
LOreal SA and Entreprendre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Entreprendre
The main advantage of trading using opposite LOreal SA and Entreprendre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Entreprendre 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 Entreprendre will offset losses from the drop in Entreprendre'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 |
| Entreprendre vs. Entreparticuli | Entreprendre vs. Enertime SAS | Entreprendre vs. Oeneo SA | Entreprendre vs. Enogia SAS |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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