Correlation Between Pernod Ricard and Thales SA
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Thales 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 Pernod Ricard and Thales SA 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 Thales SA, you can compare the effects of market volatilities on Pernod Ricard and Thales 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 Pernod Ricard with a short position of Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Thales SA.
Diversification Opportunities for Pernod Ricard and Thales SA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pernod and Thales is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and Thales SA go up and down completely randomly.
Pair Corralation between Pernod Ricard and Thales SA
Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Thales SA. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 1.16 times less risky than Thales SA. The stock trades about -0.32 of its potential returns per unit of risk. The Thales SA is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 15,195 in Thales SA on August 28, 2024 and sell it today you would lose (1,010) from holding Thales SA or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pernod Ricard SA vs. Thales SA
Performance |
| Timeline |
| Pernod Ricard SA |
| Thales SA |
Pernod Ricard and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and Thales SA
The main advantage of trading using opposite Pernod Ricard and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, Thales 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 Thales SA will offset losses from the drop in Thales SA'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 |
| Thales SA vs. Safran SA | Thales SA vs. Dassault Systemes SE | Thales SA vs. Dassault Aviation SA | Thales SA vs. Vinci 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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