Correlation Between Carrefour and Vinci SA

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

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

Diversification Opportunities for Carrefour and Vinci SA

-0.42

Correlation Coefficient

Carrefour  Vinci SA

Very good diversification

The 3 months correlation between Carrefour and Vinci is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA and Carrefour 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 Carrefour SA are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Carrefour i.e., Carrefour and Vinci SA go up and down completely randomly.

Pair Corralation between Carrefour and Vinci SA

Assuming the 90 days horizon Carrefour SA is expected to under-perform the Vinci SA. In addition to that, Carrefour is 1.79 times more volatile than Vinci SA. It trades about -0.1 of its total potential returns per unit of risk. Vinci SA is currently generating about 0.18 per unit of volatility. If you would invest  9,986  in Vinci SA on November 29, 2024 and sell it today you would earn a total of  1,094  from holding Vinci SA or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carrefour SA  vs.  Vinci SA

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vinci SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vinci SA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Carrefour and Vinci SA

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

The idea behind Carrefour SA and Vinci SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.