Correlation Between Compagnie and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Compagnie 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 Compagnie and Eiffage SA 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 Eiffage SA, you can compare the effects of market volatilities on Compagnie 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 Compagnie with a short position of Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Eiffage SA.
Diversification Opportunities for Compagnie and Eiffage SA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compagnie and Eiffage is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA 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 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 Compagnie i.e., Compagnie and Eiffage SA go up and down completely randomly.
Pair Corralation between Compagnie and Eiffage SA
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.18 times more return on investment than Eiffage SA. However, Compagnie is 1.18 times more volatile than Eiffage SA. It trades about 0.09 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.01 per unit of risk. If you would invest 6,732 in Compagnie de Saint Gobain on November 8, 2024 and sell it today you would earn a total of 2,592 from holding Compagnie de Saint Gobain or generate 38.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Eiffage SA
Performance |
| Timeline |
| Compagnie de Saint |
| Eiffage SA |
Compagnie and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Eiffage SA
The main advantage of trading using opposite Compagnie and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| Eiffage SA vs. Vinci SA | Eiffage SA vs. Bouygues SA | Eiffage SA vs. Legrand SA | Eiffage 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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