Correlation Between Caltagirone SpA and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and ESSILORLUXOTTICA 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 Caltagirone SpA and ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Caltagirone SpA and ESSILORLUXOTTICA 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 Caltagirone SpA with a short position of ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and ESSILORLUXOTTICA.
Diversification Opportunities for Caltagirone SpA and ESSILORLUXOTTICA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caltagirone and ESSILORLUXOTTICA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON and Caltagirone SpA 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 Caltagirone SpA are associated (or correlated) with ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between Caltagirone SpA and ESSILORLUXOTTICA
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.06 times less return on investment than ESSILORLUXOTTICA. In addition to that, Caltagirone SpA is 1.48 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.25 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.39 per unit of volatility. If you would invest 11,400 in ESSILORLUXOTTICA 12ON on October 22, 2024 and sell it today you would earn a total of 700.00 from holding ESSILORLUXOTTICA 12ON or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Caltagirone SpA vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| Caltagirone SpA |
| ESSILORLUXOTTICA 12ON |
Caltagirone SpA and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and ESSILORLUXOTTICA
The main advantage of trading using opposite Caltagirone SpA and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| Caltagirone SpA vs. CREO MEDICAL GRP | Caltagirone SpA vs. CVR Medical Corp | Caltagirone SpA vs. IMAGIN MEDICAL INC | Caltagirone SpA vs. ONWARD MEDICAL BV |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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