Correlation Between Vallourec and Manitou BF
Can any of the company-specific risk be diversified away by investing in both Vallourec and Manitou BF 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 Vallourec and Manitou BF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vallourec and Manitou BF SA, you can compare the effects of market volatilities on Vallourec and Manitou BF 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 Vallourec with a short position of Manitou BF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vallourec and Manitou BF.
Diversification Opportunities for Vallourec and Manitou BF
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vallourec and Manitou is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vallourec and Manitou BF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitou BF SA and Vallourec 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 Vallourec are associated (or correlated) with Manitou BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitou BF SA has no effect on the direction of Vallourec i.e., Vallourec and Manitou BF go up and down completely randomly.
Pair Corralation between Vallourec and Manitou BF
Assuming the 90 days horizon Vallourec is expected to generate 0.91 times more return on investment than Manitou BF. However, Vallourec is 1.09 times less risky than Manitou BF. It trades about 0.06 of its potential returns per unit of risk. Manitou BF SA is currently generating about -0.04 per unit of risk. If you would invest 1,280 in Vallourec on September 4, 2024 and sell it today you would earn a total of 372.00 from holding Vallourec or generate 29.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vallourec vs. Manitou BF SA
Performance |
| Timeline |
| Vallourec |
| Manitou BF SA |
Vallourec and Manitou BF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vallourec and Manitou BF
The main advantage of trading using opposite Vallourec and Manitou BF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vallourec position performs unexpectedly, Manitou BF 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 Manitou BF will offset losses from the drop in Manitou BF's long position.The idea behind Vallourec and Manitou BF SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Manitou BF vs. Haulotte Group SA | Manitou BF vs. Trigano SA | Manitou BF vs. Bnteau SA | Manitou BF vs. Derichebourg |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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