Correlation Between Wendel and Bollore SA

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

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

Diversification Opportunities for Wendel and Bollore SA

0.37

Correlation Coefficient

Wendel  Bollore SA

Weak diversification

The 3 months correlation between Wendel and Bollore is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Bollore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bollore SA and Wendel 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 Wendel are associated (or correlated) with Bollore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bollore SA has no effect on the direction of Wendel i.e., Wendel and Bollore SA go up and down completely randomly.

Pair Corralation between Wendel and Bollore SA

Assuming the 90 days horizon Wendel is expected to generate 1.11 times more return on investment than Bollore SA. However, Wendel is 1.11 times more volatile than Bollore SA. It trades about -0.02 of its potential returns per unit of risk. Bollore SA is currently generating about -0.07 per unit of risk. If you would invest  9,270  in Wendel on December 30, 2024 and sell it today you would lose (195.00) from holding Wendel or give up 2.1% of portfolio value over 90 days.

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

Wendel  vs.  Bollore SA

Wendel

Risk-Adjusted Performance

Very Weak

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

Bollore SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Wendel and Bollore SA

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

The idea behind Wendel and Bollore SA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.