Correlation Between Nexity and Icade SA

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

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

Diversification Opportunities for Nexity and Icade SA

0.17

Correlation Coefficient

Nexity  Icade SA

Average diversification

The 3 months correlation between Nexity and Icade is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and Icade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icade SA and Nexity 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 Nexity are associated (or correlated) with Icade SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icade SA has no effect on the direction of Nexity i.e., Nexity and Icade SA go up and down completely randomly.

Pair Corralation between Nexity and Icade SA

Assuming the 90 days trading horizon Nexity is expected to generate 1.37 times more return on investment than Icade SA. However, Nexity is 1.37 times more volatile than Icade SA. It trades about 0.11 of its potential returns per unit of risk. Icade SA is currently generating about 0.05 per unit of risk. If you would invest  942.00  in Nexity on September 4, 2024 and sell it today you would earn a total of  176.00  from holding Nexity or generate 18.68% return on investment over 90 days.

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

Nexity  vs.  Icade SA

Nexity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Nexity sustained solid returns over the last few months and may actually be approaching a breakup point.

Icade SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icade SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Icade 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 Nexity and Icade SA

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

The idea behind Nexity and Icade 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.