Correlation Between Groupama Entreprises and Swedbank Robur

Can any of the company-specific risk be diversified away by investing in both Groupama Entreprises and Swedbank Robur 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 Groupama Entreprises and Swedbank Robur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Groupama Entreprises N and Swedbank Robur Corporate, you can compare the effects of market volatilities on Groupama Entreprises and Swedbank Robur 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 Groupama Entreprises with a short position of Swedbank Robur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupama Entreprises and Swedbank Robur.

Diversification Opportunities for Groupama Entreprises and Swedbank Robur

0.85

Correlation Coefficient

Groupama Entreprises  Swedbank Robur

Very poor diversification

The 3 months correlation between Groupama and Swedbank is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and Swedbank Robur Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank Robur Corporate and Groupama Entreprises 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 Groupama Entreprises N are associated (or correlated) with Swedbank Robur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank Robur Corporate has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and Swedbank Robur go up and down completely randomly.

Pair Corralation between Groupama Entreprises and Swedbank Robur

Assuming the 90 days trading horizon Groupama Entreprises is expected to generate 3.28 times less return on investment than Swedbank Robur. But when comparing it to its historical volatility, Groupama Entreprises N is 14.96 times less risky than Swedbank Robur. It trades about 0.97 of its potential returns per unit of risk. Swedbank Robur Corporate is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  971.00  in Swedbank Robur Corporate on September 22, 2024 and sell it today you would earn a total of  8.00  from holding Swedbank Robur Corporate or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Groupama Entreprises N  vs.  Swedbank Robur Corporate

Groupama Entreprises

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 78 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Groupama Entreprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Swedbank Robur Corporate

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Groupama Entreprises and Swedbank Robur

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

The idea behind Groupama Entreprises N and Swedbank Robur Corporate 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.