Correlation Between Bonduelle SCA and LOreal SA
Can any of the company-specific risk be diversified away by investing in both Bonduelle SCA and LOreal 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 Bonduelle SCA and LOreal SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bonduelle SCA and LOreal SA, you can compare the effects of market volatilities on Bonduelle SCA and LOreal 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 Bonduelle SCA with a short position of LOreal SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonduelle SCA and LOreal SA.
Diversification Opportunities for Bonduelle SCA and LOreal SA
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bonduelle and LOreal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bonduelle SCA and LOreal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOreal SA and Bonduelle SCA 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 Bonduelle SCA are associated (or correlated) with LOreal SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOreal SA has no effect on the direction of Bonduelle SCA i.e., Bonduelle SCA and LOreal SA go up and down completely randomly.
Pair Corralation between Bonduelle SCA and LOreal SA
Assuming the 90 days trading horizon Bonduelle SCA is expected to under-perform the LOreal SA. But the stock apears to be less risky and, when comparing its historical volatility, Bonduelle SCA is 1.33 times less risky than LOreal SA. The stock trades about -0.3 of its potential returns per unit of risk. The LOreal SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 34,425 in LOreal SA on September 1, 2024 and sell it today you would lose (1,560) from holding LOreal SA or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bonduelle SCA vs. LOreal SA
Performance |
| Timeline |
| Bonduelle SCA |
| LOreal SA |
Bonduelle SCA and LOreal SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bonduelle SCA and LOreal SA
The main advantage of trading using opposite Bonduelle SCA and LOreal SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonduelle SCA position performs unexpectedly, LOreal 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 LOreal SA will offset losses from the drop in LOreal SA's long position.| Bonduelle SCA vs. Socit BIC SA | Bonduelle SCA vs. Bnteau SA | Bonduelle SCA vs. Casino Guichard Perrachon | Bonduelle SCA vs. SEB SA |
| LOreal SA vs. LVMH Mot Hennessy | LOreal SA vs. Danone SA | LOreal SA vs. Air Liquide SA | LOreal SA vs. Hermes International SCA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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