Correlation Between Danone SA and Kerry Group
Can any of the company-specific risk be diversified away by investing in both Danone SA and Kerry Group 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 Kerry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Kerry Group PLC, you can compare the effects of market volatilities on Danone SA and Kerry Group 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 Kerry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Kerry Group.
Diversification Opportunities for Danone SA and Kerry Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danone and Kerry is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Kerry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Group PLC 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 Kerry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group PLC has no effect on the direction of Danone SA i.e., Danone SA and Kerry Group go up and down completely randomly.
Pair Corralation between Danone SA and Kerry Group
Assuming the 90 days horizon Danone SA is expected to generate 1.58 times more return on investment than Kerry Group. However, Danone SA is 1.58 times more volatile than Kerry Group PLC. It trades about 0.04 of its potential returns per unit of risk. Kerry Group PLC is currently generating about 0.02 per unit of risk. If you would invest 4,863 in Danone SA on September 14, 2024 and sell it today you would earn a total of 1,880 from holding Danone SA or generate 38.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.09% |
| Values | Daily Returns |
Danone SA vs. Kerry Group PLC
Performance |
| Timeline |
| Danone SA |
| Kerry Group PLC |
Danone SA and Kerry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and Kerry Group
The main advantage of trading using opposite Danone SA and Kerry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, Kerry Group 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 Kerry Group will offset losses from the drop in Kerry Group's long position.| Danone SA vs. BRF SA ADR | Danone SA vs. Pilgrims Pride Corp | Danone SA vs. John B Sanfilippo | Danone SA vs. Seneca Foods Corp |
| Kerry Group vs. Associated British Foods | Kerry Group vs. Bunzl plc | Kerry Group vs. Ashtead Gro | Kerry Group vs. Coloplast A |
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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