Correlation Between SPIE SA and Eurazeo

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

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

Diversification Opportunities for SPIE SA and Eurazeo

0.85

Correlation Coefficient

SPIE SA  Eurazeo

Very poor diversification

The 3 months correlation between SPIE and Eurazeo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPIE SA and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo and SPIE 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 SPIE SA are associated (or correlated) with Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of SPIE SA i.e., SPIE SA and Eurazeo go up and down completely randomly.

Pair Corralation between SPIE SA and Eurazeo

Assuming the 90 days trading horizon SPIE SA is expected to generate 0.82 times more return on investment than Eurazeo. However, SPIE SA is 1.22 times less risky than Eurazeo. It trades about 0.25 of its potential returns per unit of risk. Eurazeo is currently generating about 0.17 per unit of risk. If you would invest  2,926  in SPIE SA on December 1, 2024 and sell it today you would earn a total of  502.00  from holding SPIE SA or generate 17.16% return on investment over 90 days.

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

SPIE SA  vs.  Eurazeo

SPIE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPIE SA are ranked lower than 20 (%) 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.

Eurazeo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurazeo are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eurazeo sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPIE SA and Eurazeo

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

The idea behind SPIE SA and Eurazeo 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.