Correlation Between Wavestone and Capgemini
Can any of the company-specific risk be diversified away by investing in both Wavestone and Capgemini 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 Wavestone and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wavestone SA and Capgemini SE, you can compare the effects of market volatilities on Wavestone and Capgemini 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 Wavestone with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wavestone and Capgemini.
Diversification Opportunities for Wavestone and Capgemini
Almost no diversification
The 3 months correlation between Wavestone and Capgemini is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wavestone SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Wavestone 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 Wavestone SA are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Wavestone i.e., Wavestone and Capgemini go up and down completely randomly.
Pair Corralation between Wavestone and Capgemini
Assuming the 90 days trading horizon Wavestone SA is expected to under-perform the Capgemini. In addition to that, Wavestone is 1.06 times more volatile than Capgemini SE. It trades about -0.13 of its total potential returns per unit of risk. Capgemini SE is currently generating about -0.11 per unit of volatility. If you would invest 15,920 in Capgemini SE on September 1, 2024 and sell it today you would lose (730.00) from holding Capgemini SE or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wavestone SA vs. Capgemini SE
Performance |
| Timeline |
| Wavestone SA |
| Capgemini SE |
Wavestone and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wavestone and Capgemini
The main advantage of trading using opposite Wavestone and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wavestone position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Wavestone vs. Chargeurs SA | Wavestone vs. Straumann Holding AG | Wavestone vs. Manitou BF SA | Wavestone vs. Amundi Index Solutions |
| Capgemini vs. Atos SE | Capgemini vs. Compagnie de Saint Gobain | Capgemini vs. Pernod Ricard SA | Capgemini 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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