Correlation Between Capgemini and CLARIVATE PLC

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

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

Diversification Opportunities for Capgemini and CLARIVATE PLC

0.72

Correlation Coefficient

Capgemini  CLARIVATE PLC

Poor diversification

The 3 months correlation between Capgemini and CLARIVATE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and CLARIVATE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLARIVATE PLC and Capgemini 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 Capgemini SE are associated (or correlated) with CLARIVATE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLARIVATE PLC has no effect on the direction of Capgemini i.e., Capgemini and CLARIVATE PLC go up and down completely randomly.

Pair Corralation between Capgemini and CLARIVATE PLC

Assuming the 90 days horizon Capgemini is expected to generate 1.17 times less return on investment than CLARIVATE PLC. In addition to that, Capgemini is 2.19 times more volatile than CLARIVATE PLC. It trades about 0.05 of its total potential returns per unit of risk. CLARIVATE PLC is currently generating about 0.12 per unit of volatility. If you would invest  498.00  in CLARIVATE PLC on October 22, 2024 and sell it today you would earn a total of  11.00  from holding CLARIVATE PLC or generate 2.21% return on investment over 90 days.

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

Capgemini SE  vs.  CLARIVATE PLC

Capgemini SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CLARIVATE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLARIVATE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Capgemini and CLARIVATE PLC

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

The idea behind Capgemini SE and CLARIVATE PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.