Correlation Between EssilorLuxottica and Crossject

Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Crossject 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 EssilorLuxottica and Crossject into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EssilorLuxottica S A and Crossject, you can compare the effects of market volatilities on EssilorLuxottica and Crossject 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 EssilorLuxottica with a short position of Crossject. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Crossject.

Diversification Opportunities for EssilorLuxottica and Crossject

-0.74

Correlation Coefficient

EssilorLuxottica  Crossject

Pay attention - limited upside

The 3 months correlation between EssilorLuxottica and Crossject is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica S A and Crossject in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossject and EssilorLuxottica 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 EssilorLuxottica S A are associated (or correlated) with Crossject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossject has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Crossject go up and down completely randomly.

Pair Corralation between EssilorLuxottica and Crossject

Assuming the 90 days horizon EssilorLuxottica S A is expected to generate 0.31 times more return on investment than Crossject. However, EssilorLuxottica S A is 3.24 times less risky than Crossject. It trades about 0.18 of its potential returns per unit of risk. Crossject is currently generating about -0.05 per unit of risk. If you would invest  20,590  in EssilorLuxottica S A on September 24, 2024 and sell it today you would earn a total of  2,530  from holding EssilorLuxottica S A or generate 12.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EssilorLuxottica S A  vs.  Crossject

EssilorLuxottica S

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EssilorLuxottica S A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EssilorLuxottica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Crossject

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crossject has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EssilorLuxottica and Crossject

The main advantage of trading using opposite EssilorLuxottica and Crossject positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Crossject 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 Crossject will offset losses from the drop in Crossject's long position.

The idea behind EssilorLuxottica S A and Crossject 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.