Correlation Between Renault SA and Mazda
Can any of the company-specific risk be diversified away by investing in both Renault SA and Mazda 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 Renault SA and Mazda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Mazda Motor, you can compare the effects of market volatilities on Renault SA and Mazda 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 Renault SA with a short position of Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Mazda.
Diversification Opportunities for Renault SA and Mazda
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Renault and Mazda is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Mazda Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor and Renault SA 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 Renault SA are associated (or correlated) with Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor has no effect on the direction of Renault SA i.e., Renault SA and Mazda go up and down completely randomly.
Pair Corralation between Renault SA and Mazda
Assuming the 90 days horizon Renault SA is expected to under-perform the Mazda. But the pink sheet apears to be less risky and, when comparing its historical volatility, Renault SA is 2.41 times less risky than Mazda. The pink sheet trades about -0.43 of its potential returns per unit of risk. The Mazda Motor is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 694.00 in Mazda Motor on August 28, 2024 and sell it today you would lose (47.00) from holding Mazda Motor or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renault SA vs. Mazda Motor
Performance |
| Timeline |
| Renault SA |
| Mazda Motor |
Renault SA and Mazda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renault SA and Mazda
The main advantage of trading using opposite Renault SA and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda's long position.| Renault SA vs. Isuzu Motors | Renault SA vs. Toyota Motor Corp | Renault SA vs. Porsche Automobile Holding |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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