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 ADR, 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
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bureau and Legrand is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bureau Veritas SA and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR 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 ADR 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 horizon Bureau Veritas is expected to generate 2.92 times less return on investment than Legrand SA. But when comparing it to its historical volatility, Bureau Veritas SA is 2.02 times less risky than Legrand SA. It trades about 0.15 of its potential returns per unit of risk. Legrand SA ADR is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,000 in Legrand SA ADR on November 18, 2024 and sell it today you would earn a total of 251.00 from holding Legrand SA ADR or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bureau Veritas SA vs. Legrand SA ADR
Performance |
| Timeline |
| Bureau Veritas SA |
| Legrand SA ADR |
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. Legrand SA ADR | Bureau Veritas vs. Teleperformance PK | Bureau Veritas vs. BANDAI NAMCO Holdings | Bureau Veritas vs. Thales SA ADR |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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