Correlation Between Nestl SA and Lerøy Seafood
Can any of the company-specific risk be diversified away by investing in both Nestl SA and Lerøy Seafood 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 Lerøy Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestl SA and Lery Seafood Group, you can compare the effects of market volatilities on Nestl SA and Lerøy Seafood 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 Lerøy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and Lerøy Seafood.
Diversification Opportunities for Nestl SA and Lerøy Seafood
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nestl and Lerøy is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lerøy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Nestl SA i.e., Nestl SA and Lerøy Seafood go up and down completely randomly.
Pair Corralation between Nestl SA and Lerøy Seafood
Assuming the 90 days trading horizon Nestl SA is expected to under-perform the Lerøy Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Nestl SA is 7.75 times less risky than Lerøy Seafood. The stock trades about -0.06 of its potential returns per unit of risk. The Lery Seafood Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Lery Seafood Group on September 3, 2024 and sell it today you would earn a total of 263.00 from holding Lery Seafood Group or generate 150.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestl SA vs. Lery Seafood Group
Performance |
| Timeline |
| Nestl SA |
| Lery Seafood Group |
Nestl SA and Lerøy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestl SA and Lerøy Seafood
The main advantage of trading using opposite Nestl SA and Lerøy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestl SA position performs unexpectedly, Lerøy Seafood 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 Lerøy Seafood will offset losses from the drop in Lerøy Seafood's long position.| Nestl SA vs. Southwest Airlines Co | Nestl SA vs. Clean Energy Fuels | Nestl SA vs. WILLIS LEASE FIN | Nestl SA vs. UNITED RENTALS |
| Lerøy Seafood vs. Nestl SA | Lerøy Seafood vs. Kraft Heinz Co | Lerøy Seafood vs. General Mills | Lerøy Seafood vs. Kellogg Company |
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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