Correlation Between EssilorLuxottica and Worldline
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Worldline 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 Worldline 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 Worldline SA, you can compare the effects of market volatilities on EssilorLuxottica and Worldline 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 Worldline. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Worldline.
Diversification Opportunities for EssilorLuxottica and Worldline
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EssilorLuxottica and Worldline is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica S A and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA 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 Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Worldline go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Worldline
Assuming the 90 days horizon EssilorLuxottica is expected to generate 2.87 times less return on investment than Worldline. But when comparing it to its historical volatility, EssilorLuxottica S A is 3.83 times less risky than Worldline. It trades about 0.19 of its potential returns per unit of risk. Worldline SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 599.00 in Worldline SA on September 25, 2024 and sell it today you would earn a total of 209.00 from holding Worldline SA or generate 34.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
EssilorLuxottica S A vs. Worldline SA
Performance |
Timeline |
EssilorLuxottica S |
Worldline SA |
EssilorLuxottica and Worldline Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EssilorLuxottica and Worldline
The main advantage of trading using opposite EssilorLuxottica and Worldline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Worldline 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 Worldline will offset losses from the drop in Worldline's long position.EssilorLuxottica vs. Pernod Ricard SA | EssilorLuxottica vs. LOreal SA | EssilorLuxottica vs. Kering SA | EssilorLuxottica vs. Hermes International SCA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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