Correlation Between Compagnie Generale and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Compagnie Generale and Legrand SA 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 Compagnie Generale and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Generale des and Legrand SA, you can compare the effects of market volatilities on Compagnie Generale and Legrand SA 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 Compagnie Generale with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Generale and Legrand SA.
Diversification Opportunities for Compagnie Generale and Legrand SA
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compagnie and Legrand is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA and Compagnie Generale 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 Compagnie Generale des are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA has no effect on the direction of Compagnie Generale i.e., Compagnie Generale and Legrand SA go up and down completely randomly.
Pair Corralation between Compagnie Generale and Legrand SA
Assuming the 90 days horizon Compagnie Generale des is expected to generate 0.48 times more return on investment than Legrand SA. However, Compagnie Generale des is 2.09 times less risky than Legrand SA. It trades about 0.01 of its potential returns per unit of risk. Legrand SA is currently generating about -0.15 per unit of risk. If you would invest 3,103 in Compagnie Generale des on August 25, 2024 and sell it today you would earn a total of 7.00 from holding Compagnie Generale des or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Generale des vs. Legrand SA
Performance |
| Timeline |
| Compagnie Generale des |
| Legrand SA |
Compagnie Generale and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Generale and Legrand SA
The main advantage of trading using opposite Compagnie Generale and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Generale position performs unexpectedly, Legrand SA 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Compagnie Generale vs. Savencia SA | Compagnie Generale vs. Akwel SA | Compagnie Generale vs. Wendel | Compagnie Generale vs. Manitou BF SA |
| Legrand SA vs. Schneider Electric SE | Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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