Correlation Between Renault SA and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Renault SA and Axalta Coating 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 Renault SA and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Axalta Coating Systems, you can compare the effects of market volatilities on Renault SA and Axalta Coating 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 Renault SA with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Axalta Coating.
Diversification Opportunities for Renault SA and Axalta Coating
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Renault and Axalta is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Renault SA 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 Renault SA are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Renault SA i.e., Renault SA and Axalta Coating go up and down completely randomly.
Pair Corralation between Renault SA and Axalta Coating
Assuming the 90 days horizon Renault SA is expected to generate 0.59 times more return on investment than Axalta Coating. However, Renault SA is 1.68 times less risky than Axalta Coating. It trades about 0.14 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about -0.01 per unit of risk. If you would invest 4,860 in Renault SA on December 21, 2024 and sell it today you would earn a total of 435.00 from holding Renault SA or generate 8.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Renault SA vs. Axalta Coating Systems
Performance |
Timeline |
Renault SA |
Axalta Coating Systems |
Renault SA and Axalta Coating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Renault SA and Axalta Coating
The main advantage of trading using opposite Renault SA and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.Renault SA vs. Integral Ad Science | Renault SA vs. Century Communities | Renault SA vs. RBC Bearings Incorporated | Renault SA vs. Anterix |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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