Correlation Between Groupama Entreprises and Vanguard Funds

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

Diversification Opportunities for Groupama Entreprises and Vanguard Funds

0.84

Correlation Coefficient

Groupama Entreprises  Vanguard Funds

Very poor diversification

The 3 months correlation between Groupama and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and Vanguard Funds go up and down completely randomly.

Pair Corralation between Groupama Entreprises and Vanguard Funds

Assuming the 90 days trading horizon Groupama Entreprises is expected to generate 10.11 times less return on investment than Vanguard Funds. But when comparing it to its historical volatility, Groupama Entreprises N is 73.28 times less risky than Vanguard Funds. It trades about 0.95 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,216  in Vanguard Funds Public on October 20, 2024 and sell it today you would earn a total of  736.00  from holding Vanguard Funds Public or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Groupama Entreprises N  vs.  Vanguard Funds Public

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 current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Funds Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Groupama Entreprises and Vanguard Funds

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

The idea behind Groupama Entreprises N and Vanguard Funds Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.