Correlation Between STORE ELECTRONIC and Capgemini
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and Capgemini 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 STORE ELECTRONIC and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and Capgemini SE, you can compare the effects of market volatilities on STORE ELECTRONIC and Capgemini 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 STORE ELECTRONIC with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Capgemini.
Diversification Opportunities for STORE ELECTRONIC and Capgemini
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STORE and Capgemini is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and Capgemini go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and Capgemini
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.78 times more return on investment than Capgemini. However, STORE ELECTRONIC is 1.78 times more volatile than Capgemini SE. It trades about 0.04 of its potential returns per unit of risk. Capgemini SE is currently generating about 0.01 per unit of risk. If you would invest 10,596 in STORE ELECTRONIC on September 12, 2024 and sell it today you would earn a total of 2,854 from holding STORE ELECTRONIC or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. Capgemini SE
Performance |
| Timeline |
| STORE ELECTRONIC |
| Capgemini SE |
STORE ELECTRONIC and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and Capgemini
The main advantage of trading using opposite STORE ELECTRONIC and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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