Correlation Between Euronext and Encres Dubuit
Can any of the company-specific risk be diversified away by investing in both Euronext and Encres Dubuit 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 Euronext and Encres Dubuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronext NV and Encres Dubuit SA, you can compare the effects of market volatilities on Euronext and Encres Dubuit 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 Euronext with a short position of Encres Dubuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Encres Dubuit.
Diversification Opportunities for Euronext and Encres Dubuit
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Euronext and Encres is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Encres Dubuit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encres Dubuit SA and Euronext 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 Euronext NV are associated (or correlated) with Encres Dubuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encres Dubuit SA has no effect on the direction of Euronext i.e., Euronext and Encres Dubuit go up and down completely randomly.
Pair Corralation between Euronext and Encres Dubuit
Assuming the 90 days trading horizon Euronext is expected to generate 4.0 times less return on investment than Encres Dubuit. But when comparing it to its historical volatility, Euronext NV is 3.07 times less risky than Encres Dubuit. It trades about 0.12 of its potential returns per unit of risk. Encres Dubuit SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 204.00 in Encres Dubuit SA on September 24, 2024 and sell it today you would earn a total of 78.00 from holding Encres Dubuit SA or generate 38.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Euronext NV vs. Encres Dubuit SA
Performance |
Timeline |
Euronext NV |
Encres Dubuit SA |
Euronext and Encres Dubuit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Euronext and Encres Dubuit
The main advantage of trading using opposite Euronext and Encres Dubuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronext position performs unexpectedly, Encres Dubuit 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 Encres Dubuit will offset losses from the drop in Encres Dubuit's long position.Euronext vs. Caisse rgionale de | Euronext vs. Caisse Regionale de | Euronext vs. Manitou BF SA | Euronext vs. Memscap Regpt |
Encres Dubuit vs. Biosynex | Encres Dubuit vs. Eurobio Scientific SA | Encres Dubuit vs. Novacyt | Encres Dubuit vs. Intrasense |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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