Correlation Between Danone SA and Tonnellerie Francois
Can any of the company-specific risk be diversified away by investing in both Danone SA and Tonnellerie Francois 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 Danone SA and Tonnellerie Francois into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Tonnellerie Francois Freres, you can compare the effects of market volatilities on Danone SA and Tonnellerie Francois 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 Danone SA with a short position of Tonnellerie Francois. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Tonnellerie Francois.
Diversification Opportunities for Danone SA and Tonnellerie Francois
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danone and Tonnellerie is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Tonnellerie Francois Freres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonnellerie Francois and Danone SA 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 Danone SA are associated (or correlated) with Tonnellerie Francois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonnellerie Francois has no effect on the direction of Danone SA i.e., Danone SA and Tonnellerie Francois go up and down completely randomly.
Pair Corralation between Danone SA and Tonnellerie Francois
Assuming the 90 days horizon Danone SA is expected to generate 0.36 times more return on investment than Tonnellerie Francois. However, Danone SA is 2.76 times less risky than Tonnellerie Francois. It trades about -0.13 of its potential returns per unit of risk. Tonnellerie Francois Freres is currently generating about -0.05 per unit of risk. If you would invest 6,620 in Danone SA on August 31, 2024 and sell it today you would lose (150.00) from holding Danone SA or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Danone SA vs. Tonnellerie Francois Freres
Performance |
| Timeline |
| Danone SA |
| Tonnellerie Francois |
Danone SA and Tonnellerie Francois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and Tonnellerie Francois
The main advantage of trading using opposite Danone SA and Tonnellerie Francois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, Tonnellerie Francois 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 Tonnellerie Francois will offset losses from the drop in Tonnellerie Francois' long position.The idea behind Danone SA and Tonnellerie Francois Freres 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.| Tonnellerie Francois vs. Robertet SA | Tonnellerie Francois vs. Thermador Groupe SA | Tonnellerie Francois vs. Groupe Guillin SA | Tonnellerie Francois vs. Grard Perrier Industrie |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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