Correlation Between Fonciere Lyonnaise and Icade SA

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

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

Diversification Opportunities for Fonciere Lyonnaise and Icade SA

-0.43

Correlation Coefficient

Fonciere Lyonnaise  Icade SA

Very good diversification

The 3 months correlation between Fonciere and Icade is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Lyonnaise and Icade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icade SA and Fonciere Lyonnaise 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 Fonciere Lyonnaise are associated (or correlated) with Icade SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icade SA has no effect on the direction of Fonciere Lyonnaise i.e., Fonciere Lyonnaise and Icade SA go up and down completely randomly.

Pair Corralation between Fonciere Lyonnaise and Icade SA

Assuming the 90 days trading horizon Fonciere Lyonnaise is expected to generate 0.85 times more return on investment than Icade SA. However, Fonciere Lyonnaise is 1.18 times less risky than Icade SA. It trades about 0.13 of its potential returns per unit of risk. Icade SA is currently generating about 0.03 per unit of risk. If you would invest  6,400  in Fonciere Lyonnaise on September 5, 2024 and sell it today you would earn a total of  880.00  from holding Fonciere Lyonnaise or generate 13.75% return on investment over 90 days.

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

Fonciere Lyonnaise  vs.  Icade SA

Fonciere Lyonnaise

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Lyonnaise sustained solid returns over the last few months and may actually be approaching a breakup point.

Icade SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icade SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Icade SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fonciere Lyonnaise and Icade SA

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

The idea behind Fonciere Lyonnaise and Icade 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.