Correlation Between Groupama Entreprises and Invesco Pan

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

Diversification Opportunities for Groupama Entreprises and Invesco Pan

-0.76

Correlation Coefficient

Groupama Entreprises  Invesco Pan

Pay attention - limited upside

The 3 months correlation between Groupama and Invesco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and Invesco Pan European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Pan European 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 Invesco Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Pan European has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and Invesco Pan go up and down completely randomly.

Pair Corralation between Groupama Entreprises and Invesco Pan

Assuming the 90 days trading horizon Groupama Entreprises is expected to generate 1.93 times less return on investment than Invesco Pan. But when comparing it to its historical volatility, Groupama Entreprises N is 49.98 times less risky than Invesco Pan. It trades about 0.92 of its potential returns per unit of risk. Invesco Pan European is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,598  in Invesco Pan European on October 21, 2024 and sell it today you would earn a total of  22.00  from holding Invesco Pan European or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.44%
Values	Daily Returns

Groupama Entreprises N  vs.  Invesco Pan European

Groupama Entreprises

Risk-Adjusted Performance

74 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 74 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Invesco Pan European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Pan European has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Invesco Pan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Groupama Entreprises and Invesco Pan

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

The idea behind Groupama Entreprises N and Invesco Pan European 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.