Correlation Between Legrand SA and Eguana Technologies
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Eguana Technologies 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 Eguana Technologies 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 Eguana Technologies, you can compare the effects of market volatilities on Legrand SA and Eguana Technologies 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 Eguana Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Eguana Technologies.
Diversification Opportunities for Legrand SA and Eguana Technologies
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Legrand and Eguana is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Eguana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eguana Technologies 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 Eguana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eguana Technologies has no effect on the direction of Legrand SA i.e., Legrand SA and Eguana Technologies go up and down completely randomly.
Pair Corralation between Legrand SA and Eguana Technologies
Assuming the 90 days horizon Legrand SA is expected to generate 3.5 times less return on investment than Eguana Technologies. But when comparing it to its historical volatility, Legrand SA ADR is 10.04 times less risky than Eguana Technologies. It trades about 0.04 of its potential returns per unit of risk. Eguana Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Eguana Technologies on August 28, 2024 and sell it today you would lose (19.48) from holding Eguana Technologies or give up 97.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA ADR vs. Eguana Technologies
Performance |
| Timeline |
| Legrand SA ADR |
| Eguana Technologies |
Legrand SA and Eguana Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Eguana Technologies
The main advantage of trading using opposite Legrand SA and Eguana Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Eguana Technologies 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 Eguana Technologies will offset losses from the drop in Eguana Technologies' long position.| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
| Eguana Technologies vs. Element Solutions | Eguana Technologies vs. Orion Engineered Carbons | Eguana Technologies vs. Minerals Technologies | Eguana Technologies vs. Ingevity Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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