Correlation Between IDP EDUCATION and Crédit Agricole

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

By analyzing existing cross correlation between IDP EDUCATION LTD and Crdit Agricole SA, you can compare the effects of market volatilities on IDP EDUCATION and Crédit Agricole 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 IDP EDUCATION with a short position of Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP EDUCATION and Crédit Agricole.

Diversification Opportunities for IDP EDUCATION and Crédit Agricole

-0.55

Correlation Coefficient

IDP EDUCATION  Crédit Agricole

Excellent diversification

The 3 months correlation between IDP and Crédit is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA and IDP EDUCATION 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 IDP EDUCATION LTD are associated (or correlated) with Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and Crédit Agricole go up and down completely randomly.

Pair Corralation between IDP EDUCATION and Crédit Agricole

Assuming the 90 days horizon IDP EDUCATION LTD is expected to under-perform the Crédit Agricole. In addition to that, IDP EDUCATION is 4.06 times more volatile than Crdit Agricole SA. It trades about -0.04 of its total potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.32 per unit of volatility. If you would invest  1,300  in Crdit Agricole SA on December 19, 2024 and sell it today you would earn a total of  356.00  from holding Crdit Agricole SA or generate 27.38% return on investment over 90 days.

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

IDP EDUCATION LTD  vs.  Crdit Agricole SA

IDP EDUCATION LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Crdit Agricole SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Crédit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDP EDUCATION and Crédit Agricole

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

The idea behind IDP EDUCATION LTD and Crdit Agricole 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.