Correlation Between Nestle SA and Nestle SA
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Nestle 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 Nestle SA and Nestle SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Nestle SA ADR, you can compare the effects of market volatilities on Nestle SA and Nestle 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 Nestle SA with a short position of Nestle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Nestle SA.
Diversification Opportunities for Nestle SA and Nestle SA
No risk reduction
The 3 months correlation between Nestle and Nestle is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Nestle SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle SA ADR and Nestle 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 Nestle SA are associated (or correlated) with Nestle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle SA ADR has no effect on the direction of Nestle SA i.e., Nestle SA and Nestle SA go up and down completely randomly.
Pair Corralation between Nestle SA and Nestle SA
Assuming the 90 days horizon Nestle SA is expected to generate 1.07 times more return on investment than Nestle SA. However, Nestle SA is 1.07 times more volatile than Nestle SA ADR. It trades about -0.04 of its potential returns per unit of risk. Nestle SA ADR is currently generating about -0.04 per unit of risk. If you would invest 11,257 in Nestle SA on August 28, 2024 and sell it today you would lose (2,702) from holding Nestle SA or give up 24.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestle SA vs. Nestle SA ADR
Performance |
| Timeline |
| Nestle SA |
| Nestle SA ADR |
Nestle SA and Nestle SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and Nestle SA
The main advantage of trading using opposite Nestle SA and Nestle SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Nestle 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 Nestle SA will offset losses from the drop in Nestle SA's long position.| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
| Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. ConAgra Foods | Nestle SA vs. Hormel Foods |
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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