Correlation Between Rémy Cointreau and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Rémy Cointreau and Pernod Ricard 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 Rémy Cointreau and Pernod Ricard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rmy Cointreau SA and Pernod Ricard SA, you can compare the effects of market volatilities on Rémy Cointreau and Pernod Ricard 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 Rémy Cointreau with a short position of Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rémy Cointreau and Pernod Ricard.
Diversification Opportunities for Rémy Cointreau and Pernod Ricard
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rémy and Pernod is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rmy Cointreau SA and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA and Rémy 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 Rmy Cointreau SA are associated (or correlated) with Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Rémy Cointreau i.e., Rémy Cointreau and Pernod Ricard go up and down completely randomly.
Pair Corralation between Rémy Cointreau and Pernod Ricard
Assuming the 90 days horizon Rmy Cointreau SA is expected to generate 1.03 times more return on investment than Pernod Ricard. However, Rémy Cointreau is 1.03 times more volatile than Pernod Ricard SA. It trades about 0.14 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.19 per unit of risk. If you would invest 5,635 in Rmy Cointreau SA on September 3, 2024 and sell it today you would earn a total of 245.00 from holding Rmy Cointreau SA or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rmy Cointreau SA vs. Pernod Ricard SA
Performance |
| Timeline |
| Rmy Cointreau SA |
| Pernod Ricard SA |
Rémy Cointreau and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rémy Cointreau and Pernod Ricard
The main advantage of trading using opposite Rémy Cointreau and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rémy Cointreau position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.The idea behind Rmy Cointreau SA and Pernod Ricard SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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