Correlation Between Eurazeo and SPIE SA

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

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

Diversification Opportunities for Eurazeo and SPIE SA

-0.32

Correlation Coefficient

Eurazeo  SPIE SA

Very good diversification

The 3 months correlation between Eurazeo and SPIE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and SPIE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPIE SA and Eurazeo 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 Eurazeo are associated (or correlated) with SPIE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPIE SA has no effect on the direction of Eurazeo i.e., Eurazeo and SPIE SA go up and down completely randomly.

Pair Corralation between Eurazeo and SPIE SA

Assuming the 90 days horizon Eurazeo is expected to generate 32.51 times less return on investment than SPIE SA. But when comparing it to its historical volatility, Eurazeo is 1.57 times less risky than SPIE SA. It trades about 0.01 of its potential returns per unit of risk. SPIE SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,958  in SPIE SA on December 29, 2024 and sell it today you would earn a total of  1,012  from holding SPIE SA or generate 34.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Eurazeo  vs.  SPIE SA

Eurazeo

Risk-Adjusted Performance

Very Weak

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

SPIE SA

Risk-Adjusted Performance

Solid

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

Pair Trading with Eurazeo and SPIE SA

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

The idea behind Eurazeo and SPIE 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.