Correlation Between Remy Cointreau and LOreal SA
Can any of the company-specific risk be diversified away by investing in both Remy Cointreau and LOreal SA 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 Remy Cointreau and LOreal SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Remy Cointreau and LOreal SA, you can compare the effects of market volatilities on Remy Cointreau and LOreal SA 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 Remy Cointreau with a short position of LOreal SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Remy Cointreau and LOreal SA.
Diversification Opportunities for Remy Cointreau and LOreal SA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Remy and LOreal is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Remy Cointreau and LOreal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOreal SA and Remy Cointreau 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 Remy Cointreau are associated (or correlated) with LOreal SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOreal SA has no effect on the direction of Remy Cointreau i.e., Remy Cointreau and LOreal SA go up and down completely randomly.
Pair Corralation between Remy Cointreau and LOreal SA
Assuming the 90 days trading horizon Remy Cointreau is expected to under-perform the LOreal SA. In addition to that, Remy Cointreau is 1.57 times more volatile than LOreal SA. It trades about -0.08 of its total potential returns per unit of risk. LOreal SA is currently generating about 0.0 per unit of volatility. If you would invest 34,647 in LOreal SA on August 26, 2024 and sell it today you would lose (1,742) from holding LOreal SA or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Remy Cointreau vs. LOreal SA
Performance |
| Timeline |
| Remy Cointreau |
| LOreal SA |
Remy Cointreau and LOreal SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Remy Cointreau and LOreal SA
The main advantage of trading using opposite Remy Cointreau and LOreal SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Remy Cointreau position performs unexpectedly, LOreal SA 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 LOreal SA will offset losses from the drop in LOreal SA's long position.| Remy Cointreau vs. Pernod Ricard SA | Remy Cointreau vs. SEB SA | Remy Cointreau vs. Sodexo SA | Remy Cointreau vs. Wendel |
| LOreal SA vs. Remy Cointreau | LOreal SA vs. Alten SA | LOreal SA vs. Gaztransport Technigaz SAS | LOreal SA vs. Trigano 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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