Correlation Between SBF 120 and VIEL Cie

Can any of the company-specific risk be diversified away by investing in both SBF 120 and VIEL Cie 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 SBF 120 and VIEL Cie into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBF 120 and VIEL Cie socit, you can compare the effects of market volatilities on SBF 120 and VIEL Cie 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 SBF 120 with a short position of VIEL Cie. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBF 120 and VIEL Cie.

Diversification Opportunities for SBF 120 and VIEL Cie

-0.51

Correlation Coefficient

SBF 120  VIEL Cie

Excellent diversification

The 3 months correlation between SBF and VIEL is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SBF 120 and VIEL Cie socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIEL Cie socit and SBF 120 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 SBF 120 are associated (or correlated) with VIEL Cie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIEL Cie socit has no effect on the direction of SBF 120 i.e., SBF 120 and VIEL Cie go up and down completely randomly.

Pair Corralation between SBF 120 and VIEL Cie

Assuming the 90 days trading horizon SBF 120 is expected to under-perform the VIEL Cie. But the index apears to be less risky and, when comparing its historical volatility, SBF 120 is 1.34 times less risky than VIEL Cie. The index trades about -0.07 of its potential returns per unit of risk. The VIEL Cie socit is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,005  in VIEL Cie socit on September 2, 2024 and sell it today you would earn a total of  90.00  from holding VIEL Cie socit or generate 8.96% return on investment over 90 days.

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

SBF 120  vs.  VIEL Cie socit

Pair Trading with SBF 120 and VIEL Cie

The main advantage of trading using opposite SBF 120 and VIEL Cie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBF 120 position performs unexpectedly, VIEL Cie 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 VIEL Cie will offset losses from the drop in VIEL Cie's long position.

The idea behind SBF 120 and VIEL Cie socit 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 Stocks Directory module to find actively traded stocks across global markets.