Correlation Between Signify NV and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Signify NV 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 Signify NV and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signify NV and Legrand SA ADR, you can compare the effects of market volatilities on Signify NV 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 Signify NV with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signify NV and Legrand SA.
Diversification Opportunities for Signify NV and Legrand SA
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Signify and Legrand is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Signify NV and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR and Signify NV 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 Signify NV 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 ADR has no effect on the direction of Signify NV i.e., Signify NV and Legrand SA go up and down completely randomly.
Pair Corralation between Signify NV and Legrand SA
Assuming the 90 days horizon Signify NV is expected to generate 3.18 times less return on investment than Legrand SA. In addition to that, Signify NV is 3.44 times more volatile than Legrand SA ADR. It trades about 0.0 of its total potential returns per unit of risk. Legrand SA ADR is currently generating about 0.04 per unit of volatility. If you would invest 1,594 in Legrand SA ADR on August 28, 2024 and sell it today you would earn a total of 418.00 from holding Legrand SA ADR or generate 26.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.62% |
| Values | Daily Returns |
Signify NV vs. Legrand SA ADR
Performance |
| Timeline |
| Signify NV |
| Legrand SA ADR |
Signify NV and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Signify NV and Legrand SA
The main advantage of trading using opposite Signify NV and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signify NV 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.| Signify NV vs. FREYR Battery SA | Signify NV vs. nVent Electric PLC | Signify NV vs. Hubbell | Signify NV vs. Advanced Energy Industries |
| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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