Correlation Between ResMed and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both ResMed 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 ResMed and ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ResMed Inc and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on ResMed 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 ResMed with a short position of ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ResMed and ESSILORLUXOTTICA.
Diversification Opportunities for ResMed and ESSILORLUXOTTICA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ResMed and ESSILORLUXOTTICA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ResMed Inc and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON and ResMed 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 ResMed Inc 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 ResMed i.e., ResMed and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between ResMed and ESSILORLUXOTTICA
Assuming the 90 days horizon ResMed Inc is expected to generate 1.75 times more return on investment than ESSILORLUXOTTICA. However, ResMed is 1.75 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.08 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.06 per unit of risk. If you would invest 18,960 in ResMed Inc on September 1, 2024 and sell it today you would earn a total of 4,640 from holding ResMed Inc or generate 24.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ResMed Inc vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| ResMed Inc |
| ESSILORLUXOTTICA 12ON |
ResMed and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ResMed and ESSILORLUXOTTICA
The main advantage of trading using opposite ResMed and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ResMed 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.| ResMed vs. BW OFFSHORE LTD | ResMed vs. SOLSTAD OFFSHORE NK | ResMed vs. BROADWIND ENRGY | ResMed vs. Broadcom |
| ESSILORLUXOTTICA vs. SOFI TECHNOLOGIES | ESSILORLUXOTTICA vs. Amkor Technology | ESSILORLUXOTTICA vs. PLAYTIKA HOLDING DL 01 | ESSILORLUXOTTICA vs. ATRESMEDIA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |