Correlation Between Gelsenwasser and EssilorLuxottica
Can any of the company-specific risk be diversified away by investing in both Gelsenwasser and EssilorLuxottica 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 Gelsenwasser and EssilorLuxottica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gelsenwasser AG and EssilorLuxottica Socit anonyme, you can compare the effects of market volatilities on Gelsenwasser and EssilorLuxottica 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 Gelsenwasser with a short position of EssilorLuxottica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelsenwasser and EssilorLuxottica.
Diversification Opportunities for Gelsenwasser and EssilorLuxottica
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gelsenwasser and EssilorLuxottica is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and EssilorLuxottica Socit anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica Socit and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with EssilorLuxottica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EssilorLuxottica Socit has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and EssilorLuxottica go up and down completely randomly.
Pair Corralation between Gelsenwasser and EssilorLuxottica
Assuming the 90 days horizon Gelsenwasser AG is expected to under-perform the EssilorLuxottica. In addition to that, Gelsenwasser is 2.41 times more volatile than EssilorLuxottica Socit anonyme. It trades about -0.04 of its total potential returns per unit of risk. EssilorLuxottica Socit anonyme is currently generating about 0.07 per unit of volatility. If you would invest 17,635 in EssilorLuxottica Socit anonyme on August 26, 2024 and sell it today you would earn a total of 5,975 from holding EssilorLuxottica Socit anonyme or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gelsenwasser AG vs. EssilorLuxottica Socit anonyme
Performance |
| Timeline |
| Gelsenwasser AG |
| EssilorLuxottica Socit |
Gelsenwasser and EssilorLuxottica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gelsenwasser and EssilorLuxottica
The main advantage of trading using opposite Gelsenwasser and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gelsenwasser position performs unexpectedly, EssilorLuxottica 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 EssilorLuxottica will offset losses from the drop in EssilorLuxottica's long position.| Gelsenwasser vs. Spirent Communications plc | Gelsenwasser vs. SLR Investment Corp | Gelsenwasser vs. Singapore Telecommunications Limited | Gelsenwasser vs. INTERSHOP Communications Aktiengesellschaft |
| EssilorLuxottica vs. PTT Global Chemical | EssilorLuxottica vs. Ryanair Holdings plc | EssilorLuxottica vs. Alaska Air Group | EssilorLuxottica vs. SHIN ETSU CHEMICAL |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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