Correlation Between Safran SA and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Safran SA and Eiffage 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 Safran SA and Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Eiffage SA, you can compare the effects of market volatilities on Safran SA and Eiffage 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 Safran SA with a short position of Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Eiffage SA.
Diversification Opportunities for Safran SA and Eiffage SA
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Safran and Eiffage is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA and Safran 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 Safran SA are associated (or correlated) with Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of Safran SA i.e., Safran SA and Eiffage SA go up and down completely randomly.
Pair Corralation between Safran SA and Eiffage SA
Assuming the 90 days trading horizon Safran SA is expected to generate 1.37 times more return on investment than Eiffage SA. However, Safran SA is 1.37 times more volatile than Eiffage SA. It trades about 0.11 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.14 per unit of risk. If you would invest 21,140 in Safran SA on August 28, 2024 and sell it today you would earn a total of 680.00 from holding Safran SA or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. Eiffage SA
Performance |
| Timeline |
| Safran SA |
| Eiffage SA |
Safran SA and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Eiffage SA
The main advantage of trading using opposite Safran SA and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Eiffage 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Safran SA vs. Thales SA | Safran SA vs. Vinci SA | Safran SA vs. Air Liquide SA | Safran SA vs. Dassault Systemes SE |
| Eiffage SA vs. SQLI SA | Eiffage SA vs. Foncire Volta | Eiffage SA vs. Moulinvest | Eiffage SA vs. Manitou BF SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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