Correlation Between Compagnie and Nexans SA
Can any of the company-specific risk be diversified away by investing in both Compagnie and Nexans 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 Nexans 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 Nexans SA, you can compare the effects of market volatilities on Compagnie and Nexans 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 Nexans SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Nexans SA.
Diversification Opportunities for Compagnie and Nexans SA
Very good diversification
The 3 months correlation between Compagnie and Nexans is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans 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 Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Compagnie i.e., Compagnie and Nexans SA go up and down completely randomly.
Pair Corralation between Compagnie and Nexans SA
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.64 times more return on investment than Nexans SA. However, Compagnie de Saint Gobain is 1.55 times less risky than Nexans SA. It trades about 0.1 of its potential returns per unit of risk. Nexans SA is currently generating about -0.31 per unit of risk. If you would invest 8,348 in Compagnie de Saint Gobain on August 31, 2024 and sell it today you would earn a total of 258.00 from holding Compagnie de Saint Gobain or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Nexans SA
Performance |
| Timeline |
| Compagnie de Saint |
| Nexans SA |
Compagnie and Nexans SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Nexans SA
The main advantage of trading using opposite Compagnie and Nexans SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Nexans 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 Nexans SA will offset losses from the drop in Nexans SA's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| Nexans SA vs. Air Liquide SA | Nexans SA vs. Vinci SA | Nexans SA vs. LOreal SA | Nexans 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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