Correlation Between Maisons Du and Bernard Loisea

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

By analyzing existing cross correlation between Maisons du Monde and Bernard Loisea, you can compare the effects of market volatilities on Maisons Du and Bernard Loisea 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 Maisons Du with a short position of Bernard Loisea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maisons Du and Bernard Loisea.

Diversification Opportunities for Maisons Du and Bernard Loisea

0.3

Correlation Coefficient

Maisons Du  Bernard Loisea

Weak diversification

The 3 months correlation between Maisons and Bernard is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Maisons du Monde and Bernard Loisea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bernard Loisea and Maisons Du 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 Maisons du Monde are associated (or correlated) with Bernard Loisea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bernard Loisea has no effect on the direction of Maisons Du i.e., Maisons Du and Bernard Loisea go up and down completely randomly.

Pair Corralation between Maisons Du and Bernard Loisea

Assuming the 90 days trading horizon Maisons du Monde is expected to generate 0.64 times more return on investment than Bernard Loisea. However, Maisons du Monde is 1.55 times less risky than Bernard Loisea. It trades about 0.08 of its potential returns per unit of risk. Bernard Loisea is currently generating about 0.03 per unit of risk. If you would invest  380.00  in Maisons du Monde on September 15, 2024 and sell it today you would earn a total of  48.00  from holding Maisons du Monde or generate 12.63% return on investment over 90 days.

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

Maisons du Monde  vs.  Bernard Loisea

Maisons du Monde

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maisons du Monde are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Maisons Du sustained solid returns over the last few months and may actually be approaching a breakup point.

Bernard Loisea

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bernard Loisea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bernard Loisea may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maisons Du and Bernard Loisea

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

The idea behind Maisons du Monde and Bernard Loisea 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.