Correlation Between Patrimoine and Fonciere Lyonnaise

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

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

Diversification Opportunities for Patrimoine and Fonciere Lyonnaise

-0.54

Correlation Coefficient

Patrimoine  Fonciere Lyonnaise

Excellent diversification

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

Pair Corralation between Patrimoine and Fonciere Lyonnaise

Assuming the 90 days trading horizon Patrimoine is expected to generate 1.31 times less return on investment than Fonciere Lyonnaise. In addition to that, Patrimoine is 1.16 times more volatile than Fonciere Lyonnaise. It trades about 0.05 of its total potential returns per unit of risk. Fonciere Lyonnaise is currently generating about 0.07 per unit of volatility. If you would invest  6,678  in Fonciere Lyonnaise on October 22, 2024 and sell it today you would earn a total of  1,322  from holding Fonciere Lyonnaise or generate 19.8% return on investment over 90 days.

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

Patrimoine et Commerce  vs.  Fonciere Lyonnaise

Patrimoine et Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fonciere Lyonnaise

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Lyonnaise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patrimoine and Fonciere Lyonnaise

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

The idea behind Patrimoine et Commerce and Fonciere Lyonnaise 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.