Correlation Between Compagnie and Spotify Technology

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

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

Diversification Opportunities for Compagnie and Spotify Technology

0.68

Correlation Coefficient

Compagnie  Spotify Technology

Poor diversification

The 3 months correlation between Compagnie and Spotify is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Compagnie i.e., Compagnie and Spotify Technology go up and down completely randomly.

Pair Corralation between Compagnie and Spotify Technology

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.16 times more return on investment than Spotify Technology. However, Compagnie is 1.16 times more volatile than Spotify Technology SA. It trades about 0.16 of its potential returns per unit of risk. Spotify Technology SA is currently generating about -0.06 per unit of risk. If you would invest  9,430  in Compagnie de Saint Gobain on April 20, 2025 and sell it today you would earn a total of  725.00  from holding Compagnie de Saint Gobain or generate 7.69% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Spotify Technology SA

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compagnie exhibited solid returns over the last few months and may actually be approaching a breakup point.

Spotify Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie and Spotify Technology

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

The idea behind Compagnie de Saint Gobain and Spotify Technology SA 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.