Correlation Between Retail Estates and EssilorLuxottica
Can any of the company-specific risk be diversified away by investing in both Retail Estates and EssilorLuxottica 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 Retail Estates and EssilorLuxottica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and EssilorLuxottica Socit anonyme, you can compare the effects of market volatilities on Retail Estates and EssilorLuxottica 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 Retail Estates with a short position of EssilorLuxottica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and EssilorLuxottica.
Diversification Opportunities for Retail Estates and EssilorLuxottica
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and EssilorLuxottica is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and EssilorLuxottica Socit anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica Socit and Retail Estates 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 Retail Estates NV are associated (or correlated) with EssilorLuxottica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EssilorLuxottica Socit has no effect on the direction of Retail Estates i.e., Retail Estates and EssilorLuxottica go up and down completely randomly.
Pair Corralation between Retail Estates and EssilorLuxottica
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the EssilorLuxottica. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.11 times less risky than EssilorLuxottica. The stock trades about -0.21 of its potential returns per unit of risk. The EssilorLuxottica Socit anonyme is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 20,970 in EssilorLuxottica Socit anonyme on September 11, 2024 and sell it today you would earn a total of 2,050 from holding EssilorLuxottica Socit anonyme or generate 9.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Retail Estates NV vs. EssilorLuxottica Socit anonyme
Performance |
Timeline |
Retail Estates NV |
EssilorLuxottica Socit |
Retail Estates and EssilorLuxottica Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Retail Estates and EssilorLuxottica
The main advantage of trading using opposite Retail Estates and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, EssilorLuxottica 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 EssilorLuxottica will offset losses from the drop in EssilorLuxottica's long position.Retail Estates vs. Realty Income | Retail Estates vs. Link Real Estate | Retail Estates vs. Kimco Realty | Retail Estates vs. Klpierre SA |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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