Correlation Between Danone SA and BioAdaptives
Can any of the company-specific risk be diversified away by investing in both Danone SA and BioAdaptives 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 BioAdaptives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and BioAdaptives, you can compare the effects of market volatilities on Danone SA and BioAdaptives 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 BioAdaptives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and BioAdaptives.
Diversification Opportunities for Danone SA and BioAdaptives
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Danone and BioAdaptives is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and BioAdaptives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAdaptives 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 BioAdaptives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAdaptives has no effect on the direction of Danone SA i.e., Danone SA and BioAdaptives go up and down completely randomly.
Pair Corralation between Danone SA and BioAdaptives
Assuming the 90 days horizon Danone SA is expected to generate 3.61 times less return on investment than BioAdaptives. But when comparing it to its historical volatility, Danone SA is 12.33 times less risky than BioAdaptives. It trades about 0.09 of its potential returns per unit of risk. BioAdaptives is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in BioAdaptives on October 23, 2024 and sell it today you would lose (1.00) from holding BioAdaptives or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Danone SA vs. BioAdaptives
Performance |
| Timeline |
| Danone SA |
| BioAdaptives |
Danone SA and BioAdaptives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and BioAdaptives
The main advantage of trading using opposite Danone SA and BioAdaptives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, BioAdaptives 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 BioAdaptives will offset losses from the drop in BioAdaptives' long position.| Danone SA vs. Lifevantage | Danone SA vs. Simply Good Foods | Danone SA vs. Bellring Brands LLC | Danone SA vs. Seneca Foods Corp |
| BioAdaptives vs. Nates Food Co | BioAdaptives vs. Qed Connect | BioAdaptives vs. Branded Legacy | BioAdaptives vs. Grand Havana |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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