Correlation Between Groupama Entreprises and Invesco Euro

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

Diversification Opportunities for Groupama Entreprises and Invesco Euro

0.06

Correlation Coefficient

Groupama Entreprises  Invesco Euro

Significant diversification

The 3 months correlation between Groupama and Invesco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and Invesco Euro Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Euro 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 Invesco Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Euro Corporate has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and Invesco Euro go up and down completely randomly.

Pair Corralation between Groupama Entreprises and Invesco Euro

Assuming the 90 days trading horizon Groupama Entreprises N is expected to generate 0.04 times more return on investment than Invesco Euro. However, Groupama Entreprises N is 22.43 times less risky than Invesco Euro. It trades about 0.97 of its potential returns per unit of risk. Invesco Euro Corporate is currently generating about -0.04 per unit of risk. If you would invest  59,420  in Groupama Entreprises N on December 26, 2024 and sell it today you would earn a total of  408.00  from holding Groupama Entreprises N or generate 0.69% return on investment over 90 days.

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

Groupama Entreprises N  vs.  Invesco Euro Corporate

Groupama Entreprises

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 75 (%) 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.

Invesco Euro Corporate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Euro Corporate has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Invesco Euro 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 Euro

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

The idea behind Groupama Entreprises N and Invesco Euro 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.