Correlation Between Compagnie and Nexity
Can any of the company-specific risk be diversified away by investing in both Compagnie and Nexity 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 Nexity 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 Nexity, you can compare the effects of market volatilities on Compagnie and Nexity 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 Nexity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Nexity.
Diversification Opportunities for Compagnie and Nexity
Poor diversification
The 3 months correlation between Compagnie and Nexity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Nexity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexity 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 Nexity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexity has no effect on the direction of Compagnie i.e., Compagnie and Nexity go up and down completely randomly.
Pair Corralation between Compagnie and Nexity
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.59 times more return on investment than Nexity. However, Compagnie de Saint Gobain is 1.7 times less risky than Nexity. It trades about 0.21 of its potential returns per unit of risk. Nexity is currently generating about -0.05 per unit of risk. If you would invest 8,188 in Compagnie de Saint Gobain on August 24, 2024 and sell it today you would earn a total of 602.00 from holding Compagnie de Saint Gobain or generate 7.35% 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. Nexity
Performance |
| Timeline |
| Compagnie de Saint |
| Nexity |
Compagnie and Nexity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Nexity
The main advantage of trading using opposite Compagnie and Nexity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Nexity 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 Nexity will offset losses from the drop in Nexity's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |