Correlation Between Vertiv Holdings and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings 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 Vertiv Holdings and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and Legrand SA ADR, you can compare the effects of market volatilities on Vertiv Holdings 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 Vertiv Holdings with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and Legrand SA.
Diversification Opportunities for Vertiv Holdings and Legrand SA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vertiv and Legrand is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co 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 Vertiv Holdings 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 Vertiv Holdings Co 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 Vertiv Holdings i.e., Vertiv Holdings and Legrand SA go up and down completely randomly.
Pair Corralation between Vertiv Holdings and Legrand SA
Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 2.44 times more return on investment than Legrand SA. However, Vertiv Holdings is 2.44 times more volatile than Legrand SA ADR. It trades about 0.15 of its potential returns per unit of risk. Legrand SA ADR is currently generating about -0.32 per unit of risk. If you would invest 11,245 in Vertiv Holdings Co on August 31, 2024 and sell it today you would earn a total of 1,449 from holding Vertiv Holdings Co or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vertiv Holdings Co vs. Legrand SA ADR
Performance |
| Timeline |
| Vertiv Holdings |
| Legrand SA ADR |
Vertiv Holdings and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertiv Holdings and Legrand SA
The main advantage of trading using opposite Vertiv Holdings and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings 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.| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer Holdings |
| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Energizer Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |