Correlation Between Capgemini and NTT Data
Can any of the company-specific risk be diversified away by investing in both Capgemini and NTT Data 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 NTT Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE ADR and NTT Data Corp, you can compare the effects of market volatilities on Capgemini and NTT Data 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 NTT Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and NTT Data.
Diversification Opportunities for Capgemini and NTT Data
Very weak diversification
The 3 months correlation between Capgemini and NTT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and NTT Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT Data Corp 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 ADR are associated (or correlated) with NTT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT Data Corp has no effect on the direction of Capgemini i.e., Capgemini and NTT Data go up and down completely randomly.
Pair Corralation between Capgemini and NTT Data
Assuming the 90 days horizon Capgemini SE ADR is expected to generate 1.04 times more return on investment than NTT Data. However, Capgemini is 1.04 times more volatile than NTT Data Corp. It trades about -0.04 of its potential returns per unit of risk. NTT Data Corp is currently generating about -0.06 per unit of risk. If you would invest 3,262 in Capgemini SE ADR on December 5, 2024 and sell it today you would lose (191.00) from holding Capgemini SE ADR or give up 5.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capgemini SE ADR vs. NTT Data Corp
Performance |
Timeline |
Capgemini SE ADR |
NTT Data Corp |
Capgemini and NTT Data Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capgemini and NTT Data
The main advantage of trading using opposite Capgemini and NTT Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, NTT Data 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 NTT Data will offset losses from the drop in NTT Data's long position.Capgemini vs. Soluna Holdings Preferred | Capgemini vs. Crypto Co | Capgemini vs. ASGN Inc | Capgemini vs. Soluna Holdings |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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