Correlation Between Vinci SA and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Vinci SA 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 Vinci SA and Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci SA ADR and Eiffage SA ADR, you can compare the effects of market volatilities on Vinci SA 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 Vinci SA with a short position of Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci SA and Eiffage SA.
Diversification Opportunities for Vinci SA and Eiffage SA
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vinci and Eiffage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA ADR and Eiffage SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA ADR and Vinci SA 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 Vinci SA ADR 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 ADR has no effect on the direction of Vinci SA i.e., Vinci SA and Eiffage SA go up and down completely randomly.
Pair Corralation between Vinci SA and Eiffage SA
Assuming the 90 days horizon Vinci SA ADR is expected to under-perform the Eiffage SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vinci SA ADR is 2.09 times less risky than Eiffage SA. The pink sheet trades about -0.3 of its potential returns per unit of risk. The Eiffage SA ADR is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,889 in Eiffage SA ADR on September 4, 2024 and sell it today you would lose (140.00) from holding Eiffage SA ADR or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vinci SA ADR vs. Eiffage SA ADR
Performance |
| Timeline |
| Vinci SA ADR |
| Eiffage SA ADR |
Vinci SA and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vinci SA and Eiffage SA
The main advantage of trading using opposite Vinci SA and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA 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.| Vinci SA vs. Arcadis NV | Vinci SA vs. KBR Inc | Vinci SA vs. Orion Group Holdings | Vinci SA vs. Jacobs Solutions |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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