Correlation Between Renault SA and Carrefour
Can any of the company-specific risk be diversified away by investing in both Renault SA and Carrefour 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 Carrefour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Carrefour SA, you can compare the effects of market volatilities on Renault SA and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Carrefour.
Diversification Opportunities for Renault SA and Carrefour
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Renault and Carrefour is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Renault SA i.e., Renault SA and Carrefour go up and down completely randomly.
Pair Corralation between Renault SA and Carrefour
Assuming the 90 days trading horizon Renault SA is expected to under-perform the Carrefour. In addition to that, Renault SA is 1.24 times more volatile than Carrefour SA. It trades about -0.37 of its total potential returns per unit of risk. Carrefour SA is currently generating about -0.04 per unit of volatility. If you would invest 1,460 in Carrefour SA on August 28, 2024 and sell it today you would lose (12.00) from holding Carrefour SA or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renault SA vs. Carrefour SA
Performance |
| Timeline |
| Renault SA |
| Carrefour SA |
Renault SA and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renault SA and Carrefour
The main advantage of trading using opposite Renault SA and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Renault SA vs. Carrefour SA | Renault SA vs. BNP Paribas SA | Renault SA vs. Societe Generale SA | Renault SA vs. Credit Agricole SA |
| Carrefour vs. Lagardere SCA | Carrefour vs. Mtropole Tlvision SA | Carrefour vs. Mercialys SA | Carrefour vs. Nexity |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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