Correlation Between Pernod Ricard and EssilorLuxottica
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and EssilorLuxottica 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 Pernod Ricard and EssilorLuxottica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and EssilorLuxottica S A, you can compare the effects of market volatilities on Pernod Ricard and EssilorLuxottica 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 Pernod Ricard with a short position of EssilorLuxottica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and EssilorLuxottica.
Diversification Opportunities for Pernod Ricard and EssilorLuxottica
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pernod and EssilorLuxottica is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and EssilorLuxottica S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica S and Pernod Ricard 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 Pernod Ricard SA are associated (or correlated) with EssilorLuxottica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EssilorLuxottica S has no effect on the direction of Pernod Ricard i.e., Pernod Ricard and EssilorLuxottica go up and down completely randomly.
Pair Corralation between Pernod Ricard and EssilorLuxottica
Assuming the 90 days horizon Pernod Ricard SA is expected to generate 1.63 times more return on investment than EssilorLuxottica. However, Pernod Ricard is 1.63 times more volatile than EssilorLuxottica S A. It trades about 0.02 of its potential returns per unit of risk. EssilorLuxottica S A is currently generating about -0.06 per unit of risk. If you would invest 10,725 in Pernod Ricard SA on September 25, 2024 and sell it today you would earn a total of 35.00 from holding Pernod Ricard SA or generate 0.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pernod Ricard SA vs. EssilorLuxottica S A
Performance |
Timeline |
Pernod Ricard SA |
EssilorLuxottica S |
Pernod Ricard and EssilorLuxottica Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pernod Ricard and EssilorLuxottica
The main advantage of trading using opposite Pernod Ricard and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, EssilorLuxottica 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 EssilorLuxottica will offset losses from the drop in EssilorLuxottica's long position.Pernod Ricard vs. Robertet SA | Pernod Ricard vs. Virbac SA | Pernod Ricard vs. Tonnellerie Francois Freres | Pernod Ricard vs. Thermador Groupe SA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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