Correlation Between Bains Mer and Euronext

Can any of the company-specific risk be diversified away by investing in both Bains Mer and Euronext 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 Bains Mer and Euronext into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bains Mer Monaco and Euronext NV, you can compare the effects of market volatilities on Bains Mer and Euronext 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 Bains Mer with a short position of Euronext. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bains Mer and Euronext.

Diversification Opportunities for Bains Mer and Euronext

0.18

Correlation Coefficient

Bains Mer  Euronext

Average diversification

The 3 months correlation between Bains and Euronext is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bains Mer Monaco and Euronext NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronext NV and Bains Mer 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 Bains Mer Monaco are associated (or correlated) with Euronext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronext NV has no effect on the direction of Bains Mer i.e., Bains Mer and Euronext go up and down completely randomly.

Pair Corralation between Bains Mer and Euronext

Assuming the 90 days trading horizon Bains Mer is expected to generate 10.08 times less return on investment than Euronext. In addition to that, Bains Mer is 1.49 times more volatile than Euronext NV. It trades about 0.02 of its total potential returns per unit of risk. Euronext NV is currently generating about 0.34 per unit of volatility. If you would invest  10,680  in Euronext NV on December 30, 2024 and sell it today you would earn a total of  2,560  from holding Euronext NV or generate 23.97% return on investment over 90 days.

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

Bains Mer Monaco  vs.  Euronext NV

Bains Mer Monaco

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bains Mer Monaco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bains Mer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Euronext NV

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Euronext sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bains Mer and Euronext

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

The idea behind Bains Mer Monaco and Euronext NV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.