Correlation Between Legrand SA and Prysmian SpA
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Prysmian SpA 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 Prysmian SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA and Prysmian SpA, you can compare the effects of market volatilities on Legrand SA and Prysmian SpA 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 Prysmian SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Prysmian SpA.
Diversification Opportunities for Legrand SA and Prysmian SpA
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legrand and Prysmian is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA and Prysmian SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prysmian SpA 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 are associated (or correlated) with Prysmian SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prysmian SpA has no effect on the direction of Legrand SA i.e., Legrand SA and Prysmian SpA go up and down completely randomly.
Pair Corralation between Legrand SA and Prysmian SpA
Assuming the 90 days horizon Legrand SA is expected to generate 0.76 times more return on investment than Prysmian SpA. However, Legrand SA is 1.32 times less risky than Prysmian SpA. It trades about 0.11 of its potential returns per unit of risk. Prysmian SpA is currently generating about 0.05 per unit of risk. If you would invest 8,676 in Legrand SA on November 27, 2024 and sell it today you would earn a total of 2,997 from holding Legrand SA or generate 34.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 21.94% |
| Values | Daily Returns |
Legrand SA vs. Prysmian SpA
Performance |
| Timeline |
| Legrand SA |
| Prysmian SpA |
Legrand SA and Prysmian SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Prysmian SpA
The main advantage of trading using opposite Legrand SA and Prysmian SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Prysmian SpA 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 Prysmian SpA will offset losses from the drop in Prysmian SpA's long position.| Legrand SA vs. Tantalus Systems Holding | Legrand SA vs. Signify NV | Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy |
| Prysmian SpA vs. Atkore International Group | Prysmian SpA vs. FuelCell Energy | Prysmian SpA vs. Plug Power |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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