Correlation Between Danone SA and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Danone SA and SWISS WATER 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 SWISS WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Danone SA and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and SWISS WATER.
Diversification Opportunities for Danone SA and SWISS WATER
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Danone and SWISS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Danone SA i.e., Danone SA and SWISS WATER go up and down completely randomly.
Pair Corralation between Danone SA and SWISS WATER
Assuming the 90 days trading horizon Danone SA is expected to generate 0.2 times more return on investment than SWISS WATER. However, Danone SA is 4.97 times less risky than SWISS WATER. It trades about 0.03 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.19 per unit of risk. If you would invest 6,474 in Danone SA on October 29, 2024 and sell it today you would earn a total of 22.00 from holding Danone SA or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Danone SA |
| SWISS WATER DECAFFCOFFEE |
Danone SA and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and SWISS WATER
The main advantage of trading using opposite Danone SA and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Danone SA vs. Playtech plc | Danone SA vs. HELIOS TECHS INC | Danone SA vs. Taylor Morrison Home | Danone SA vs. Autohome ADR |
| SWISS WATER vs. DFS Furniture PLC | SWISS WATER vs. Q2M Managementberatung AG | SWISS WATER vs. Perdoceo Education | SWISS WATER vs. Waste Management |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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