Correlation Between Legrand SA and Signify NV
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Signify 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 Signify 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 Signify NV, you can compare the effects of market volatilities on Legrand SA and Signify 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 Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Signify NV.
Diversification Opportunities for Legrand SA and Signify NV
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legrand and Signify is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify 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 Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Legrand SA i.e., Legrand SA and Signify NV go up and down completely randomly.
Pair Corralation between Legrand SA and Signify NV
Assuming the 90 days horizon Legrand SA is expected to generate 1.06 times less return on investment than Signify NV. But when comparing it to its historical volatility, Legrand SA ADR is 3.45 times less risky than Signify NV. It trades about 0.04 of its potential returns per unit of risk. Signify NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,546 in Signify NV on August 24, 2024 and sell it today you would lose (348.00) from holding Signify NV or give up 22.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.62% |
| Values | Daily Returns |
Legrand SA ADR vs. Signify NV
Performance |
| Timeline |
| Legrand SA ADR |
| Signify NV |
Legrand SA and Signify NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Signify NV
The main advantage of trading using opposite Legrand SA and Signify NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Signify 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 Signify NV will offset losses from the drop in Signify 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 |
| Signify NV vs. Tantalus Systems Holding | Signify NV vs. AFC Energy plc | Signify NV vs. Loop Energy | Signify NV vs. CBAK Energy Technology |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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