Correlation Between Groupe Sfpi and Nextedia
Can any of the company-specific risk be diversified away by investing in both Groupe Sfpi and Nextedia 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 Groupe Sfpi and Nextedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groupe Sfpi and Nextedia, you can compare the effects of market volatilities on Groupe Sfpi and Nextedia 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 Groupe Sfpi with a short position of Nextedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupe Sfpi and Nextedia.
Diversification Opportunities for Groupe Sfpi and Nextedia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Groupe and Nextedia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Groupe Sfpi and Nextedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextedia and Groupe Sfpi 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 Groupe Sfpi are associated (or correlated) with Nextedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextedia has no effect on the direction of Groupe Sfpi i.e., Groupe Sfpi and Nextedia go up and down completely randomly.
Pair Corralation between Groupe Sfpi and Nextedia
Assuming the 90 days trading horizon Groupe Sfpi is expected to generate 0.77 times more return on investment than Nextedia. However, Groupe Sfpi is 1.29 times less risky than Nextedia. It trades about 0.01 of its potential returns per unit of risk. Nextedia is currently generating about -0.03 per unit of risk. If you would invest 205.00 in Groupe Sfpi on September 3, 2024 and sell it today you would lose (12.00) from holding Groupe Sfpi or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groupe Sfpi vs. Nextedia
Performance |
| Timeline |
| Groupe Sfpi |
| Nextedia |
Groupe Sfpi and Nextedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupe Sfpi and Nextedia
The main advantage of trading using opposite Groupe Sfpi and Nextedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupe Sfpi position performs unexpectedly, Nextedia 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 Nextedia will offset losses from the drop in Nextedia's long position.| Groupe Sfpi vs. Groupe Guillin SA | Groupe Sfpi vs. Stef SA | Groupe Sfpi vs. SA Catana Group | Groupe Sfpi vs. Jacquet Metal Service |
| Nextedia vs. Melexis NV | Nextedia vs. ageas SANV | Nextedia vs. Sofina Socit Anonyme | Nextedia vs. Barco NV |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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