Correlation Between BGF Euro and Amundi Label

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

By analyzing existing cross correlation between BGF Euro Markets and Amundi Label Actions, you can compare the effects of market volatilities on BGF Euro and Amundi Label 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 BGF Euro with a short position of Amundi Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Euro and Amundi Label.

Diversification Opportunities for BGF Euro and Amundi Label

0.95

Correlation Coefficient

BGF Euro  Amundi Label

Almost no diversification

The 3 months correlation between BGF and Amundi is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BGF Euro Markets and Amundi Label Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Actions and BGF Euro 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 BGF Euro Markets are associated (or correlated) with Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Actions has no effect on the direction of BGF Euro i.e., BGF Euro and Amundi Label go up and down completely randomly.

Pair Corralation between BGF Euro and Amundi Label

Assuming the 90 days trading horizon BGF Euro is expected to generate 1.19 times less return on investment than Amundi Label. In addition to that, BGF Euro is 1.13 times more volatile than Amundi Label Actions. It trades about 0.15 of its total potential returns per unit of risk. Amundi Label Actions is currently generating about 0.21 per unit of volatility. If you would invest  29,889  in Amundi Label Actions on December 23, 2024 and sell it today you would earn a total of  3,405  from holding Amundi Label Actions or generate 11.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

BGF Euro Markets  vs.  Amundi Label Actions

BGF Euro Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Euro Markets are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, BGF Euro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amundi Label Actions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Label Actions are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Amundi Label may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BGF Euro and Amundi Label

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

The idea behind BGF Euro Markets and Amundi Label Actions 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.