Correlation Between Bureau Veritas and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Bureau Veritas and Legrand 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 Bureau Veritas and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bureau Veritas SA and Legrand SA, you can compare the effects of market volatilities on Bureau Veritas and Legrand 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 Bureau Veritas with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bureau Veritas and Legrand SA.
Diversification Opportunities for Bureau Veritas and Legrand SA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bureau and Legrand is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA and Bureau Veritas 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 Bureau Veritas SA are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA has no effect on the direction of Bureau Veritas i.e., Bureau Veritas and Legrand SA go up and down completely randomly.
Pair Corralation between Bureau Veritas and Legrand SA
Assuming the 90 days trading horizon Bureau Veritas SA is expected to generate 0.55 times more return on investment than Legrand SA. However, Bureau Veritas SA is 1.8 times less risky than Legrand SA. It trades about -0.1 of its potential returns per unit of risk. Legrand SA is currently generating about -0.22 per unit of risk. If you would invest 2,956 in Bureau Veritas SA on August 28, 2024 and sell it today you would lose (78.00) from holding Bureau Veritas SA or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bureau Veritas SA vs. Legrand SA
Performance |
| Timeline |
| Bureau Veritas SA |
| Legrand SA |
Bureau Veritas and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bureau Veritas and Legrand SA
The main advantage of trading using opposite Bureau Veritas and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bureau Veritas position performs unexpectedly, Legrand 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Bureau Veritas vs. Prodways Group SA | Bureau Veritas vs. Claranova SE | Bureau Veritas vs. DBV Technologies SA | Bureau Veritas vs. Manitou BF SA |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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