Correlation Between IMCD NV and Legrand SA
Can any of the company-specific risk be diversified away by investing in both IMCD NV 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 IMCD NV and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCD NV and Legrand SA ADR, you can compare the effects of market volatilities on IMCD NV 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 IMCD NV with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCD NV and Legrand SA.
Diversification Opportunities for IMCD NV and Legrand SA
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IMCD and Legrand is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IMCD NV 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 IMCD NV 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 IMCD NV 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 IMCD NV i.e., IMCD NV and Legrand SA go up and down completely randomly.
Pair Corralation between IMCD NV and Legrand SA
Assuming the 90 days horizon IMCD NV is expected to generate 1.25 times more return on investment than Legrand SA. However, IMCD NV is 1.25 times more volatile than Legrand SA ADR. It trades about -0.11 of its potential returns per unit of risk. Legrand SA ADR is currently generating about -0.22 per unit of risk. If you would invest 8,292 in IMCD NV on September 19, 2024 and sell it today you would lose (737.00) from holding IMCD NV or give up 8.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMCD NV vs. Legrand SA ADR
Performance |
| Timeline |
| IMCD NV |
| Legrand SA ADR |
IMCD NV and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCD NV and Legrand SA
The main advantage of trading using opposite IMCD NV and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCD NV 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.| IMCD NV vs. Teleperformance PK | IMCD NV vs. Bureau Veritas SA | IMCD NV vs. Legrand SA ADR | IMCD NV vs. Nomura Research Institute |
| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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