Correlation Between Legrand SA and Bureau Veritas
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Bureau Veritas 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 Bureau Veritas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA and Bureau Veritas SA, you can compare the effects of market volatilities on Legrand SA and Bureau Veritas 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 Bureau Veritas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Bureau Veritas.
Diversification Opportunities for Legrand SA and Bureau Veritas
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legrand and Bureau is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA and Bureau Veritas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bureau Veritas SA 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 Bureau Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bureau Veritas SA has no effect on the direction of Legrand SA i.e., Legrand SA and Bureau Veritas go up and down completely randomly.
Pair Corralation between Legrand SA and Bureau Veritas
Assuming the 90 days horizon Legrand SA is expected to generate 2.09 times more return on investment than Bureau Veritas. However, Legrand SA is 2.09 times more volatile than Bureau Veritas SA. It trades about 0.16 of its potential returns per unit of risk. Bureau Veritas SA is currently generating about 0.2 per unit of risk. If you would invest 9,254 in Legrand SA on November 4, 2024 and sell it today you would earn a total of 634.00 from holding Legrand SA or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA vs. Bureau Veritas SA
Performance |
| Timeline |
| Legrand SA |
| Bureau Veritas SA |
Legrand SA and Bureau Veritas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Bureau Veritas
The main advantage of trading using opposite Legrand SA and Bureau Veritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Bureau Veritas 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 Bureau Veritas will offset losses from the drop in Bureau Veritas' long position.| Legrand SA vs. Schneider Electric SE | Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des |
| Bureau Veritas vs. Edenred SA | Bureau Veritas vs. Legrand SA | Bureau Veritas vs. Sodexo SA | Bureau Veritas vs. Wendel |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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