Correlation Between Euronext and Amundi SA

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

By analyzing existing cross correlation between Euronext NV and Amundi SA, you can compare the effects of market volatilities on Euronext and Amundi SA 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 Amundi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Amundi SA.

Diversification Opportunities for Euronext and Amundi SA

-0.36

Correlation Coefficient

Euronext  Amundi SA

Very good diversification

The 3 months correlation between Euronext and Amundi is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Amundi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi 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 Amundi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi SA has no effect on the direction of Euronext i.e., Euronext and Amundi SA go up and down completely randomly.

Pair Corralation between Euronext and Amundi SA

Assuming the 90 days trading horizon Euronext NV is expected to generate 0.84 times more return on investment than Amundi SA. However, Euronext NV is 1.18 times less risky than Amundi SA. It trades about 0.08 of its potential returns per unit of risk. Amundi SA is currently generating about 0.04 per unit of risk. If you would invest  6,752  in Euronext NV on September 4, 2024 and sell it today you would earn a total of  3,748  from holding Euronext NV or generate 55.51% return on investment over 90 days.

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

Euronext NV  vs.  Amundi SA

Euronext NV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Euronext may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amundi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi SA 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 Euronext and Amundi SA

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

The idea behind Euronext NV and Amundi SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..