Correlation Between Glanbia PLC and Danone SA
Can any of the company-specific risk be diversified away by investing in both Glanbia PLC and Danone 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 Glanbia PLC and Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glanbia PLC ADR and Danone SA, you can compare the effects of market volatilities on Glanbia PLC and Danone 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 Glanbia PLC with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and Danone SA.
Diversification Opportunities for Glanbia PLC and Danone SA
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Glanbia and Danone is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC ADR and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Glanbia PLC 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 Glanbia PLC ADR are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Danone SA go up and down completely randomly.
Pair Corralation between Glanbia PLC and Danone SA
Assuming the 90 days horizon Glanbia PLC ADR is expected to generate 2.0 times more return on investment than Danone SA. However, Glanbia PLC is 2.0 times more volatile than Danone SA. It trades about 0.05 of its potential returns per unit of risk. Danone SA is currently generating about 0.05 per unit of risk. If you would invest 8,200 in Glanbia PLC ADR on September 2, 2024 and sell it today you would earn a total of 1,275 from holding Glanbia PLC ADR or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 59.82% |
| Values | Daily Returns |
Glanbia PLC ADR vs. Danone SA
Performance |
| Timeline |
| Glanbia PLC ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Danone SA |
Glanbia PLC and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glanbia PLC and Danone SA
The main advantage of trading using opposite Glanbia PLC and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia PLC position performs unexpectedly, Danone 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 Danone SA will offset losses from the drop in Danone SA's long position.| Glanbia PLC vs. Danone SA | Glanbia PLC vs. Lifevantage | Glanbia PLC vs. Simply Good Foods | Glanbia PLC vs. Bellring Brands LLC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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