Correlation Between Pernod Ricard and Groupe Pizzorno

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Can any of the company-specific risk be diversified away by investing in both Pernod Ricard and Groupe Pizzorno 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 Pernod Ricard and Groupe Pizzorno into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and Groupe Pizzorno Environnement, you can compare the effects of market volatilities on Pernod Ricard and Groupe Pizzorno 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 Pernod Ricard with a short position of Groupe Pizzorno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Groupe Pizzorno.

Diversification Opportunities for Pernod Ricard and Groupe Pizzorno

-0.68
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Pernod Ricard and Groupe Pizzorno

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Groupe Pizzorno. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 2.48 times less risky than Groupe Pizzorno. The stock trades about -0.21 of its potential returns per unit of risk. The Groupe Pizzorno Environnement is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,940  in Groupe Pizzorno Environnement on January 28, 2024 and sell it today you would earn a total of  60.00  from holding Groupe Pizzorno Environnement or generate 0.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Pernod Ricard SA  vs.  Groupe Pizzorno Environnement

 Performance 
       Timeline  
Pernod Ricard SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pernod Ricard SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Groupe Pizzorno Envi 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Pizzorno Environnement are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Groupe Pizzorno sustained solid returns over the last few months and may actually be approaching a breakup point.

Pernod Ricard and Groupe Pizzorno Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pernod Ricard and Groupe Pizzorno

The main advantage of trading using opposite Pernod Ricard and Groupe Pizzorno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard position performs unexpectedly, Groupe Pizzorno 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 Groupe Pizzorno will offset losses from the drop in Groupe Pizzorno's long position.
The idea behind Pernod Ricard SA and Groupe Pizzorno Environnement 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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