Correlation Between Legrand SA and Givaudan
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Givaudan 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 Givaudan 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 Givaudan SA ADR, you can compare the effects of market volatilities on Legrand SA and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Givaudan.
Diversification Opportunities for Legrand SA and Givaudan
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legrand and Givaudan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Givaudan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA ADR 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA ADR has no effect on the direction of Legrand SA i.e., Legrand SA and Givaudan go up and down completely randomly.
Pair Corralation between Legrand SA and Givaudan
Assuming the 90 days horizon Legrand SA ADR is expected to under-perform the Givaudan. In addition to that, Legrand SA is 1.31 times more volatile than Givaudan SA ADR. It trades about -0.03 of its total potential returns per unit of risk. Givaudan SA ADR is currently generating about -0.03 per unit of volatility. If you would invest 9,373 in Givaudan SA ADR on September 1, 2024 and sell it today you would lose (524.00) from holding Givaudan SA ADR or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA ADR vs. Givaudan SA ADR
Performance |
| Timeline |
| Legrand SA ADR |
| Givaudan SA ADR |
Legrand SA and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Givaudan
The main advantage of trading using opposite Legrand SA and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Energizer Holdings |
| Givaudan vs. Sherwin Williams Co | Givaudan vs. Air Liquide SA | Givaudan vs. Air Products and | Givaudan vs. Ecolab Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |