Correlation Between Euronext and Otc Markets
Can any of the company-specific risk be diversified away by investing in both Euronext and Otc Markets 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 Euronext and Otc Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronext NV and Otc Markets Group, you can compare the effects of market volatilities on Euronext and Otc Markets 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 Euronext with a short position of Otc Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Otc Markets.
Diversification Opportunities for Euronext and Otc Markets
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Euronext and Otc is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV and Otc Markets Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otc Markets Group and Euronext 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 Euronext NV are associated (or correlated) with Otc Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otc Markets Group has no effect on the direction of Euronext i.e., Euronext and Otc Markets go up and down completely randomly.
Pair Corralation between Euronext and Otc Markets
Assuming the 90 days horizon Euronext NV is expected to generate 0.19 times more return on investment than Otc Markets. However, Euronext NV is 5.4 times less risky than Otc Markets. It trades about 0.22 of its potential returns per unit of risk. Otc Markets Group is currently generating about -0.1 per unit of risk. If you would invest 9,317 in Euronext NV on January 17, 2024 and sell it today you would earn a total of 103.00 from holding Euronext NV or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euronext NV vs. Otc Markets Group
Performance |
| Timeline |
| Euronext NV |
| Otc Markets Group |
Euronext and Otc Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronext and Otc Markets
The main advantage of trading using opposite Euronext and Otc Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronext position performs unexpectedly, Otc Markets 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 Otc Markets will offset losses from the drop in Otc Markets' long position.| Euronext vs. Moodys | Euronext vs. MSCI Inc | Euronext vs. Intercontinental Exchange | Euronext vs. CME Group |
| Otc Markets vs. Putnam Short Duration | Otc Markets vs. Royce Opportunity Fund | Otc Markets vs. C4 TherapeuticsInc | Otc Markets vs. LSI Industries |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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