Correlation Between Sanofi ADR and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Sanofi ADR and AstraZeneca PLC 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 Sanofi ADR and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi ADR and AstraZeneca PLC, you can compare the effects of market volatilities on Sanofi ADR and AstraZeneca PLC 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 Sanofi ADR with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and AstraZeneca PLC.
Diversification Opportunities for Sanofi ADR and AstraZeneca PLC
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanofi and AstraZeneca is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC and Sanofi ADR 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 Sanofi ADR are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Sanofi ADR and AstraZeneca PLC
Considering the 90-day investment horizon Sanofi ADR is expected to generate 2.46 times less return on investment than AstraZeneca PLC. But when comparing it to its historical volatility, Sanofi ADR is 2.18 times less risky than AstraZeneca PLC. It trades about 0.2 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 13,188 in AstraZeneca PLC on November 8, 2024 and sell it today you would earn a total of 1,962 from holding AstraZeneca PLC or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanofi ADR vs. AstraZeneca PLC
Performance |
| Timeline |
| Sanofi ADR |
| AstraZeneca PLC |
Sanofi ADR and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanofi ADR and AstraZeneca PLC
The main advantage of trading using opposite Sanofi ADR and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Sanofi ADR vs. AstraZeneca PLC ADR | Sanofi ADR vs. Roche Holding Ltd | Sanofi ADR vs. GlaxoSmithKline PLC ADR | Sanofi ADR vs. Merck Company |
| AstraZeneca PLC vs. Roche Holding AG | AstraZeneca PLC vs. Roche Holding AG | AstraZeneca PLC vs. Roche Holding Ltd | AstraZeneca PLC vs. Grifols SA ADR |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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