Correlation Between Danone SA and LEROY SEAFOOD
Can any of the company-specific risk be diversified away by investing in both Danone SA and LEROY SEAFOOD 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 LEROY SEAFOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and LEROY SEAFOOD GRUNSPADR, you can compare the effects of market volatilities on Danone SA and LEROY SEAFOOD 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 LEROY SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and LEROY SEAFOOD.
Diversification Opportunities for Danone SA and LEROY SEAFOOD
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danone and LEROY is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and LEROY SEAFOOD GRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEROY SEAFOOD GRUNSPADR has no effect on the direction of Danone SA i.e., Danone SA and LEROY SEAFOOD go up and down completely randomly.
Pair Corralation between Danone SA and LEROY SEAFOOD
Assuming the 90 days trading horizon Danone SA is expected to generate 3.75 times less return on investment than LEROY SEAFOOD. But when comparing it to its historical volatility, Danone SA is 1.58 times less risky than LEROY SEAFOOD. It trades about 0.2 of its potential returns per unit of risk. LEROY SEAFOOD GRUNSPADR is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 790.00 in LEROY SEAFOOD GRUNSPADR on November 3, 2024 and sell it today you would earn a total of 125.00 from holding LEROY SEAFOOD GRUNSPADR or generate 15.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. LEROY SEAFOOD GRUNSPADR
Performance |
| Timeline |
| Danone SA |
| LEROY SEAFOOD GRUNSPADR |
Danone SA and LEROY SEAFOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and LEROY SEAFOOD
The main advantage of trading using opposite Danone SA and LEROY SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, LEROY SEAFOOD 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 LEROY SEAFOOD will offset losses from the drop in LEROY SEAFOOD's long position.| Danone SA vs. United Airlines Holdings | Danone SA vs. NORTHEAST UTILITIES | Danone SA vs. SINGAPORE AIRLINES | Danone SA vs. Calibre Mining Corp |
| LEROY SEAFOOD vs. Firan Technology Group | LEROY SEAFOOD vs. ASURE SOFTWARE | LEROY SEAFOOD vs. X FAB Silicon Foundries | LEROY SEAFOOD vs. Sunstone Hotel Investors |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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