Correlation Between Renault SA and Valeo SA
Can any of the company-specific risk be diversified away by investing in both Renault SA and Valeo 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 Renault SA and Valeo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Valeo SA, you can compare the effects of market volatilities on Renault SA and Valeo 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 Renault SA with a short position of Valeo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Valeo SA.
Diversification Opportunities for Renault SA and Valeo SA
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Renault and Valeo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Valeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo 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 Valeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SA has no effect on the direction of Renault SA i.e., Renault SA and Valeo SA go up and down completely randomly.
Pair Corralation between Renault SA and Valeo SA
Assuming the 90 days trading horizon Renault SA is expected to generate 3.04 times less return on investment than Valeo SA. But when comparing it to its historical volatility, Renault SA is 1.69 times less risky than Valeo SA. It trades about 0.2 of its potential returns per unit of risk. Valeo SA is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 882.00 in Valeo SA on October 25, 2024 and sell it today you would earn a total of 155.00 from holding Valeo SA or generate 17.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renault SA vs. Valeo SA
Performance |
| Timeline |
| Renault SA |
| Valeo SA |
Renault SA and Valeo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renault SA and Valeo SA
The main advantage of trading using opposite Renault SA and Valeo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA position performs unexpectedly, Valeo 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 Valeo SA will offset losses from the drop in Valeo SA'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 |
| Valeo SA vs. Compagnie Generale des | Valeo SA vs. Renault SA | Valeo SA vs. Atos SE | Valeo SA vs. Compagnie de Saint Gobain |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |