Correlation Between Compagnie and Mr Bricolage
Can any of the company-specific risk be diversified away by investing in both Compagnie and Mr Bricolage 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 Compagnie and Mr Bricolage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Mr Bricolage, you can compare the effects of market volatilities on Compagnie and Mr Bricolage 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 Compagnie with a short position of Mr Bricolage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Mr Bricolage.
Diversification Opportunities for Compagnie and Mr Bricolage
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and ALMRB is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Mr Bricolage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Bricolage and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Mr Bricolage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Bricolage has no effect on the direction of Compagnie i.e., Compagnie and Mr Bricolage go up and down completely randomly.
Pair Corralation between Compagnie and Mr Bricolage
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.16 times more return on investment than Mr Bricolage. However, Compagnie is 1.16 times more volatile than Mr Bricolage. It trades about 0.08 of its potential returns per unit of risk. Mr Bricolage is currently generating about -0.02 per unit of risk. If you would invest 5,970 in Compagnie de Saint Gobain on August 26, 2024 and sell it today you would earn a total of 2,780 from holding Compagnie de Saint Gobain or generate 46.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Mr Bricolage
Performance |
| Timeline |
| Compagnie de Saint |
| Mr Bricolage |
Compagnie and Mr Bricolage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Mr Bricolage
The main advantage of trading using opposite Compagnie and Mr Bricolage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Mr Bricolage 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 Mr Bricolage will offset losses from the drop in Mr Bricolage's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| Mr Bricolage vs. Centrale dAchat Franaise | Mr Bricolage vs. Roche Bobois | Mr Bricolage vs. Piscines Desjoyaux SA | Mr Bricolage vs. Vente Unique |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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