June 2024 French Election Shock: Impact on Equity Correlations and Betas

Following the surprise announcement of France’s snap elections, Sismo analyzed the correlation and beta of French stocks relative to the spread between the volatile French OAT and the German 10-year Bund. This revealed how political uncertainty and widening sovereign spreads connect to individual stock movements, giving portfolio managers a risk-aware view of market reactions.

Highlights:

• Event-driven correlation mapping between French equities and sovereign bond spreads.
• Identification of stocks most sensitive to political risk shocks in France.
• Illustration of how factor-based analysis can guide portfolio adjustment in volatile macro conditions.
• Demonstration of Sismo’s visual interface for screening and ranking stocks by macro factor sensitivity.

Why It Matters:
Political shocks can trigger sudden spread movements that ripple through equity markets. By quantifying correlations and betas to sovereign spreads, investors can anticipate potential drawdowns, rebalance sector exposures, and mitigate political risk in equity portfolios.

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