Correlation Between BGF Global and Groupama Entreprises

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

By analyzing existing cross correlation between BGF Global Allocation and Groupama Entreprises N, you can compare the effects of market volatilities on BGF Global and Groupama Entreprises 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 Global with a short position of Groupama Entreprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Global and Groupama Entreprises.

Diversification Opportunities for BGF Global and Groupama Entreprises

0.95

Correlation Coefficient

BGF Global  Groupama Entreprises

Almost no diversification

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

Pair Corralation between BGF Global and Groupama Entreprises

Assuming the 90 days trading horizon BGF Global Allocation is expected to generate 51.98 times more return on investment than Groupama Entreprises. However, BGF Global is 51.98 times more volatile than Groupama Entreprises N. It trades about 0.18 of its potential returns per unit of risk. Groupama Entreprises N is currently generating about 1.02 per unit of risk. If you would invest  7,125  in BGF Global Allocation on September 13, 2024 and sell it today you would earn a total of  538.00  from holding BGF Global Allocation or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

BGF Global Allocation  vs.  Groupama Entreprises N

BGF Global Allocation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Global Allocation are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, BGF Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Groupama Entreprises

Risk-Adjusted Performance

80 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 80 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Groupama Entreprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BGF Global and Groupama Entreprises

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

The idea behind BGF Global Allocation and Groupama Entreprises N 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.