Correlation Between Lerøy Seafood and Nestl SA
Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood and Nestl 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 Lerøy Seafood and Nestl SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and Nestl SA, you can compare the effects of market volatilities on Lerøy Seafood and Nestl 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 Lerøy Seafood with a short position of Nestl SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and Nestl SA.
Diversification Opportunities for Lerøy Seafood and Nestl SA
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lerøy and Nestl is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestl SA and Lerøy Seafood 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 Lery Seafood Group are associated (or correlated) with Nestl SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestl SA has no effect on the direction of Lerøy Seafood i.e., Lerøy Seafood and Nestl SA go up and down completely randomly.
Pair Corralation between Lerøy Seafood and Nestl SA
Assuming the 90 days horizon Lery Seafood Group is expected to generate 1.74 times more return on investment than Nestl SA. However, Lerøy Seafood is 1.74 times more volatile than Nestl SA. It trades about 0.12 of its potential returns per unit of risk. Nestl SA is currently generating about -0.2 per unit of risk. If you would invest 418.00 in Lery Seafood Group on September 4, 2024 and sell it today you would earn a total of 20.00 from holding Lery Seafood Group or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lery Seafood Group vs. Nestl SA
Performance |
| Timeline |
| Lery Seafood Group |
| Nestl SA |
Lerøy Seafood and Nestl SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lerøy Seafood and Nestl SA
The main advantage of trading using opposite Lerøy Seafood and Nestl SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood position performs unexpectedly, Nestl 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 Nestl SA will offset losses from the drop in Nestl SA's long position.| Lerøy Seafood vs. Nestl SA | Lerøy Seafood vs. Kraft Heinz Co | Lerøy Seafood vs. General Mills | Lerøy Seafood vs. Kellogg Company |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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