Correlation Between LOreal SA and Caisse Rgionale
Can any of the company-specific risk be diversified away by investing in both LOreal SA and Caisse Rgionale 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 Caisse Rgionale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and Caisse rgionale de, you can compare the effects of market volatilities on LOreal SA and Caisse Rgionale 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 Caisse Rgionale. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and Caisse Rgionale.
Diversification Opportunities for LOreal SA and Caisse Rgionale
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LOreal and Caisse is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and Caisse rgionale de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caisse rgionale de 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 Caisse Rgionale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caisse rgionale de has no effect on the direction of LOreal SA i.e., LOreal SA and Caisse Rgionale go up and down completely randomly.
Pair Corralation between LOreal SA and Caisse Rgionale
Assuming the 90 days horizon LOreal SA is expected to under-perform the Caisse Rgionale. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 1.28 times less risky than Caisse Rgionale. The stock trades about -0.23 of its potential returns per unit of risk. The Caisse rgionale de is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,930 in Caisse rgionale de on August 30, 2024 and sell it today you would earn a total of 240.00 from holding Caisse rgionale de or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. Caisse rgionale de
Performance |
| Timeline |
| LOreal SA |
| Caisse rgionale de |
LOreal SA and Caisse Rgionale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and Caisse Rgionale
The main advantage of trading using opposite LOreal SA and Caisse Rgionale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, Caisse Rgionale 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 Caisse Rgionale will offset losses from the drop in Caisse Rgionale'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 |
| Caisse Rgionale vs. Caisse Regionale de | Caisse Rgionale vs. Caisse Rgionale du | Caisse Rgionale vs. Caisse Regionale de | Caisse Rgionale vs. Manitou BF 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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