Correlation Between Sanofi SA and Christian Dior
Can any of the company-specific risk be diversified away by investing in both Sanofi SA and Christian Dior 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 Sanofi SA and Christian Dior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi SA and Christian Dior SE, you can compare the effects of market volatilities on Sanofi SA and Christian Dior 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 Sanofi SA with a short position of Christian Dior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi SA and Christian Dior.
Diversification Opportunities for Sanofi SA and Christian Dior
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sanofi and Christian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi SA and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and Sanofi SA 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 Sanofi SA are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of Sanofi SA i.e., Sanofi SA and Christian Dior go up and down completely randomly.
Pair Corralation between Sanofi SA and Christian Dior
Assuming the 90 days trading horizon Sanofi SA is expected to under-perform the Christian Dior. But the stock apears to be less risky and, when comparing its historical volatility, Sanofi SA is 1.67 times less risky than Christian Dior. The stock trades about -0.15 of its potential returns per unit of risk. The Christian Dior SE is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 63,015 in Christian Dior SE on September 26, 2024 and sell it today you would lose (2,665) from holding Christian Dior SE or give up 4.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Sanofi SA vs. Christian Dior SE
Performance |
Timeline |
Sanofi SA |
Christian Dior SE |
Sanofi SA and Christian Dior Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sanofi SA and Christian Dior
The main advantage of trading using opposite Sanofi SA and Christian Dior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi SA position performs unexpectedly, Christian Dior 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 Christian Dior will offset losses from the drop in Christian Dior's long position.The idea behind Sanofi SA and Christian Dior SE 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.Christian Dior vs. FIPP SA | Christian Dior vs. Adomos SA | Christian Dior vs. Acheter Louer | Christian Dior vs. Manitou BF SA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |