Correlation Between Seaboard and EssilorLuxottica

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

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

Diversification Opportunities for Seaboard and EssilorLuxottica

-0.89

Correlation Coefficient

Seaboard  EssilorLuxottica

Pay attention - limited upside

The 3 months correlation between Seaboard and EssilorLuxottica is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and EssilorLuxottica Socit anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica Socit and Seaboard 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 Seaboard 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 Seaboard i.e., Seaboard and EssilorLuxottica go up and down completely randomly.

Pair Corralation between Seaboard and EssilorLuxottica

Assuming the 90 days horizon Seaboard is expected to under-perform the EssilorLuxottica. In addition to that, Seaboard is 1.18 times more volatile than EssilorLuxottica Socit anonyme. It trades about -0.16 of its total potential returns per unit of risk. EssilorLuxottica Socit anonyme is currently generating about 0.13 per unit of volatility. If you would invest  20,910  in EssilorLuxottica Socit anonyme on September 5, 2024 and sell it today you would earn a total of  1,980  from holding EssilorLuxottica Socit anonyme or generate 9.47% return on investment over 90 days.

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

Seaboard  vs.  EssilorLuxottica Socit anonyme

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EssilorLuxottica Socit

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EssilorLuxottica Socit anonyme are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EssilorLuxottica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seaboard and EssilorLuxottica

The main advantage of trading using opposite Seaboard and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard 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.

The idea behind Seaboard and EssilorLuxottica Socit anonyme 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.