Correlation Between Groupama Entreprises and BGF Latin

Can any of the company-specific risk be diversified away by investing in both Groupama Entreprises and BGF Latin 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 BGF Latin 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 BGF Latin American, you can compare the effects of market volatilities on Groupama Entreprises and BGF Latin 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 BGF Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupama Entreprises and BGF Latin.

Diversification Opportunities for Groupama Entreprises and BGF Latin

-0.91

Correlation Coefficient

Groupama Entreprises  BGF Latin

Pay attention - limited upside

The 3 months correlation between Groupama and BGF is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and BGF Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Latin American 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 BGF Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Latin American has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and BGF Latin go up and down completely randomly.

Pair Corralation between Groupama Entreprises and BGF Latin

Assuming the 90 days trading horizon Groupama Entreprises N is expected to generate 0.01 times more return on investment than BGF Latin. However, Groupama Entreprises N is 115.11 times less risky than BGF Latin. It trades about 0.86 of its potential returns per unit of risk. BGF Latin American is currently generating about -0.17 per unit of risk. If you would invest  59,353  in Groupama Entreprises N on October 9, 2024 and sell it today you would earn a total of  139.00  from holding Groupama Entreprises N or generate 0.23% return on investment over 90 days.

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

Groupama Entreprises N  vs.  BGF Latin American

Groupama Entreprises

Risk-Adjusted Performance

76 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 76 (%) 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.

BGF Latin American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGF Latin American has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Groupama Entreprises and BGF Latin

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

The idea behind Groupama Entreprises N and BGF Latin American 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.