Correlation Between Nestl SA and Saputo
Can any of the company-specific risk be diversified away by investing in both Nestl SA and Saputo 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 Nestl SA and Saputo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestl SA and Saputo Inc, you can compare the effects of market volatilities on Nestl SA and Saputo 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 Nestl SA with a short position of Saputo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and Saputo.
Diversification Opportunities for Nestl SA and Saputo
Very poor diversification
The 3 months correlation between Nestl and Saputo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc and Nestl 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 Nestl SA are associated (or correlated) with Saputo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of Nestl SA i.e., Nestl SA and Saputo go up and down completely randomly.
Pair Corralation between Nestl SA and Saputo
Assuming the 90 days trading horizon Nestl SA is expected to under-perform the Saputo. In addition to that, Nestl SA is 1.0 times more volatile than Saputo Inc. It trades about -0.22 of its total potential returns per unit of risk. Saputo Inc is currently generating about -0.08 per unit of volatility. If you would invest 1,787 in Saputo Inc on August 30, 2024 and sell it today you would lose (43.00) from holding Saputo Inc or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestl SA vs. Saputo Inc
Performance |
| Timeline |
| Nestl SA |
| Saputo Inc |
Nestl SA and Saputo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestl SA and Saputo
The main advantage of trading using opposite Nestl SA and Saputo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestl SA position performs unexpectedly, Saputo 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 Saputo will offset losses from the drop in Saputo's long position.| Nestl SA vs. Spirent Communications plc | Nestl SA vs. Singapore Telecommunications Limited | Nestl SA vs. PREMIER FOODS | Nestl SA vs. Cellnex Telecom SA |
| Saputo vs. MSAD INSURANCE | Saputo vs. Singapore Reinsurance | Saputo vs. SBI Insurance Group | Saputo vs. Altair Engineering |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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