Correlation Between Lagardere SCA and Imerys SA

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Can any of the company-specific risk be diversified away by investing in both Lagardere SCA and Imerys 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 Lagardere SCA and Imerys SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lagardere SCA and Imerys SA, you can compare the effects of market volatilities on Lagardere SCA and Imerys 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 Lagardere SCA with a short position of Imerys SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lagardere SCA and Imerys SA.

Diversification Opportunities for Lagardere SCA and Imerys SA

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lagardere and Imerys is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lagardere SCA and Imerys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imerys SA and Lagardere SCA 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 Lagardere SCA are associated (or correlated) with Imerys SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imerys SA has no effect on the direction of Lagardere SCA i.e., Lagardere SCA and Imerys SA go up and down completely randomly.

Pair Corralation between Lagardere SCA and Imerys SA

Assuming the 90 days trading horizon Lagardere SCA is expected to generate 0.58 times more return on investment than Imerys SA. However, Lagardere SCA is 1.71 times less risky than Imerys SA. It trades about 0.04 of its potential returns per unit of risk. Imerys SA is currently generating about 0.02 per unit of risk. If you would invest  1,782  in Lagardere SCA on October 7, 2024 and sell it today you would earn a total of  200.00  from holding Lagardere SCA or generate 11.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lagardere SCA  vs.  Imerys SA

 Performance 
       Timeline  
Lagardere SCA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lagardere SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Imerys SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Imerys SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lagardere SCA and Imerys SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lagardere SCA and Imerys SA

The main advantage of trading using opposite Lagardere SCA and Imerys SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lagardere SCA position performs unexpectedly, Imerys 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 Imerys SA will offset losses from the drop in Imerys SA's long position.
The idea behind Lagardere SCA and Imerys 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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