Correlation Between Groupama Entreprises and IShares Equity

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

Diversification Opportunities for Groupama Entreprises and IShares Equity

0.96

Correlation Coefficient

Groupama Entreprises  IShares Equity

Almost no diversification

The 3 months correlation between Groupama and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and iShares Equity Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Equity Enhanced 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 IShares Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Equity Enhanced has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and IShares Equity go up and down completely randomly.

Pair Corralation between Groupama Entreprises and IShares Equity

Assuming the 90 days trading horizon Groupama Entreprises is expected to generate 9.0 times less return on investment than IShares Equity. But when comparing it to its historical volatility, Groupama Entreprises N is 71.46 times less risky than IShares Equity. It trades about 0.98 of its potential returns per unit of risk. iShares Equity Enhanced is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  471.00  in iShares Equity Enhanced on September 23, 2024 and sell it today you would earn a total of  58.00  from holding iShares Equity Enhanced or generate 12.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	80.62%
Values	Daily Returns

Groupama Entreprises N  vs.  iShares Equity Enhanced

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.

iShares Equity Enhanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Equity Enhanced are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, IShares Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Groupama Entreprises and IShares Equity

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

The idea behind Groupama Entreprises N and iShares Equity Enhanced 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.