Correlation Between Nintendo and Societe Generale
Can any of the company-specific risk be diversified away by investing in both Nintendo and Societe Generale 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 Nintendo and Societe Generale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co ADR and Societe Generale ADR, you can compare the effects of market volatilities on Nintendo and Societe Generale 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 Nintendo with a short position of Societe Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and Societe Generale.
Diversification Opportunities for Nintendo and Societe Generale
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nintendo and Societe is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co ADR and Societe Generale ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe Generale ADR and Nintendo 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 Nintendo Co ADR are associated (or correlated) with Societe Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe Generale ADR has no effect on the direction of Nintendo i.e., Nintendo and Societe Generale go up and down completely randomly.
Pair Corralation between Nintendo and Societe Generale
Assuming the 90 days horizon Nintendo Co ADR is expected to under-perform the Societe Generale. In addition to that, Nintendo is 1.07 times more volatile than Societe Generale ADR. It trades about -0.06 of its total potential returns per unit of risk. Societe Generale ADR is currently generating about 0.25 per unit of volatility. If you would invest 471.00 in Societe Generale ADR on February 29, 2024 and sell it today you would earn a total of 121.00 from holding Societe Generale ADR or generate 25.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nintendo Co ADR vs. Societe Generale ADR
Performance |
Timeline |
Nintendo Co ADR |
Societe Generale ADR |
Nintendo and Societe Generale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nintendo and Societe Generale
The main advantage of trading using opposite Nintendo and Societe Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo position performs unexpectedly, Societe Generale 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 Societe Generale will offset losses from the drop in Societe Generale's long position.Nintendo vs. Berkshire Hathaway | Nintendo vs. First Physicians Capital | Nintendo vs. Mechanics Bank | Nintendo vs. Chocoladefabriken Lindt Sprngli |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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