Correlation Between Sanofi ADR and Grifols SA

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

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

Diversification Opportunities for Sanofi ADR and Grifols SA

-0.13

Correlation Coefficient

Sanofi ADR  Grifols SA

Good diversification

The 3 months correlation between Sanofi and Grifols is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA and Sanofi ADR 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 Sanofi ADR are associated (or correlated) with Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and Grifols SA go up and down completely randomly.

Pair Corralation between Sanofi ADR and Grifols SA

If you would invest  4,829  in Sanofi ADR on January 30, 2024 and sell it today you would earn a total of  84.00  from holding Sanofi ADR or generate 1.74% return on investment over 90 days.

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

Sanofi ADR  vs.  Grifols SA

Sanofi ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanofi ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sanofi ADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grifols SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grifols SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Grifols SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sanofi ADR and Grifols SA

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

The idea behind Sanofi ADR and Grifols 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.