Correlation Between Publicis Groupe and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Publicis Groupe 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 Publicis Groupe and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Publicis Groupe SA and Legrand SA, you can compare the effects of market volatilities on Publicis Groupe 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 Publicis Groupe with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Publicis Groupe and Legrand SA.
Diversification Opportunities for Publicis Groupe and Legrand SA
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Publicis and Legrand is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Publicis Groupe SA and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA and Publicis Groupe 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 Publicis Groupe SA 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 Publicis Groupe i.e., Publicis Groupe and Legrand SA go up and down completely randomly.
Pair Corralation between Publicis Groupe and Legrand SA
Assuming the 90 days trading horizon Publicis Groupe SA is expected to generate 0.87 times more return on investment than Legrand SA. However, Publicis Groupe SA is 1.15 times less risky than Legrand SA. It trades about 0.02 of its potential returns per unit of risk. Legrand SA is currently generating about -0.22 per unit of risk. If you would invest 10,125 in Publicis Groupe SA on August 28, 2024 and sell it today you would earn a total of 60.00 from holding Publicis Groupe SA or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Publicis Groupe SA vs. Legrand SA
Performance |
| Timeline |
| Publicis Groupe SA |
| Legrand SA |
Publicis Groupe and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Publicis Groupe and Legrand SA
The main advantage of trading using opposite Publicis Groupe and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Publicis Groupe 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.| Publicis Groupe vs. Streamwide | Publicis Groupe vs. Claranova SE | Publicis Groupe vs. SA Catana Group | Publicis Groupe vs. Manitou BF SA |
| Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des | Legrand SA vs. Compagnie de Saint Gobain |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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