Correlation Between Pernod Ricard and Capgemini
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Capgemini 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 Pernod Ricard and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and Capgemini SE, you can compare the effects of market volatilities on Pernod Ricard and Capgemini 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 Pernod Ricard with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Capgemini.
Diversification Opportunities for Pernod Ricard and Capgemini
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pernod and Capgemini is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Capgemini go up and down completely randomly.
Pair Corralation between Pernod Ricard and Capgemini
Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Capgemini. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 1.04 times less risky than Capgemini. The stock trades about -0.08 of its potential returns per unit of risk. The Capgemini SE is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 20,276 in Capgemini SE on November 3, 2024 and sell it today you would lose (2,681) from holding Capgemini SE or give up 13.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Pernod Ricard SA vs. Capgemini SE
Performance |
| Timeline |
| Pernod Ricard SA |
| Capgemini SE |
Pernod Ricard and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and Capgemini
The main advantage of trading using opposite Pernod Ricard and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Pernod Ricard vs. LOreal SA | Pernod Ricard vs. Danone SA | Pernod Ricard vs. Compagnie Generale des | Pernod Ricard vs. Air Liquide SA |
| Capgemini vs. Atos SE | Capgemini vs. Compagnie de Saint Gobain | Capgemini vs. Pernod Ricard SA | Capgemini vs. Bouygues 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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