Correlation Between Legrand SA and Alfen NV
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Alfen NV 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 Legrand SA and Alfen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA ADR and Alfen NV, you can compare the effects of market volatilities on Legrand SA and Alfen NV 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 Legrand SA with a short position of Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Alfen NV.
Diversification Opportunities for Legrand SA and Alfen NV
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legrand and Alfen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV and Legrand 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 Legrand SA ADR are associated (or correlated) with Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of Legrand SA i.e., Legrand SA and Alfen NV go up and down completely randomly.
Pair Corralation between Legrand SA and Alfen NV
Assuming the 90 days horizon Legrand SA ADR is expected to generate 0.43 times more return on investment than Alfen NV. However, Legrand SA ADR is 2.34 times less risky than Alfen NV. It trades about 0.04 of its potential returns per unit of risk. Alfen NV is currently generating about -0.11 per unit of risk. If you would invest 1,602 in Legrand SA ADR on August 24, 2024 and sell it today you would earn a total of 403.00 from holding Legrand SA ADR or generate 25.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.06% |
| Values | Daily Returns |
Legrand SA ADR vs. Alfen NV
Performance |
| Timeline |
| Legrand SA ADR |
| Alfen NV |
Legrand SA and Alfen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Alfen NV
The main advantage of trading using opposite Legrand SA and Alfen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Alfen NV 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 Alfen NV will offset losses from the drop in Alfen NV's long position.| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
| Alfen NV vs. Copa Holdings SA | Alfen NV vs. United Airlines Holdings | Alfen NV vs. Delta Air Lines | Alfen NV vs. SkyWest |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |