Correlation Between LAir Liquide and DaVita
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and DaVita 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 LAir Liquide and DaVita into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and DaVita Inc, you can compare the effects of market volatilities on LAir Liquide and DaVita 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 LAir Liquide with a short position of DaVita. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and DaVita.
Diversification Opportunities for LAir Liquide and DaVita
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LAir and DaVita is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and DaVita Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DaVita Inc and LAir Liquide 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 LAir Liquide SA are associated (or correlated) with DaVita. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DaVita Inc has no effect on the direction of LAir Liquide i.e., LAir Liquide and DaVita go up and down completely randomly.
Pair Corralation between LAir Liquide and DaVita
Assuming the 90 days trading horizon LAir Liquide SA is expected to under-perform the DaVita. But the stock apears to be less risky and, when comparing its historical volatility, LAir Liquide SA is 2.06 times less risky than DaVita. The stock trades about -0.1 of its potential returns per unit of risk. The DaVita Inc is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 12,870 in DaVita Inc on September 5, 2024 and sell it today you would earn a total of 2,655 from holding DaVita Inc or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. DaVita Inc
Performance |
| Timeline |
| LAir Liquide SA |
| DaVita Inc |
LAir Liquide and DaVita Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and DaVita
The main advantage of trading using opposite LAir Liquide and DaVita positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, DaVita 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 DaVita will offset losses from the drop in DaVita's long position.| LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc |
| DaVita vs. SEALED AIR | DaVita vs. Gamma Communications plc | DaVita vs. INTERSHOP Communications Aktiengesellschaft | DaVita vs. LAir Liquide SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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