Correlation Between SPDR Barclays and Eurazeo

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

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

Diversification Opportunities for SPDR Barclays and Eurazeo

-0.33

Correlation Coefficient

SPDR Barclays  Eurazeo

Very good diversification

The 3 months correlation between SPDR and Eurazeo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Euro and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo and SPDR Barclays 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 SPDR Barclays Euro are associated (or correlated) with Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Eurazeo go up and down completely randomly.

Pair Corralation between SPDR Barclays and Eurazeo

Assuming the 90 days trading horizon SPDR Barclays is expected to generate 1.44 times less return on investment than Eurazeo. But when comparing it to its historical volatility, SPDR Barclays Euro is 2.55 times less risky than Eurazeo. It trades about 0.04 of its potential returns per unit of risk. Eurazeo is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,801  in Eurazeo on October 5, 2024 and sell it today you would earn a total of  454.00  from holding Eurazeo or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

SPDR Barclays Euro  vs.  Eurazeo

SPDR Barclays Euro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Euro are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurazeo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurazeo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eurazeo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Barclays and Eurazeo

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

The idea behind SPDR Barclays Euro and Eurazeo 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.