Correlation Between Danone SA and Yuenglings Ice

Can any of the company-specific risk be diversified away by investing in both Danone SA and Yuenglings Ice 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 Danone SA and Yuenglings Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Danone SA and Yuenglings Ice Cream, you can compare the effects of market volatilities on Danone SA and Yuenglings Ice 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 Danone SA with a short position of Yuenglings Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Yuenglings Ice.

Diversification Opportunities for Danone SA and Yuenglings Ice

0.44

Correlation Coefficient

Danone SA  Yuenglings Ice

Very weak diversification

The 3 months correlation between Danone and Yuenglings is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Yuenglings Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuenglings Ice Cream and Danone 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 Danone SA are associated (or correlated) with Yuenglings Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuenglings Ice Cream has no effect on the direction of Danone SA i.e., Danone SA and Yuenglings Ice go up and down completely randomly.

Pair Corralation between Danone SA and Yuenglings Ice

Assuming the 90 days horizon Danone SA is expected to under-perform the Yuenglings Ice. But the otc stock apears to be less risky and, when comparing its historical volatility, Danone SA is 19.12 times less risky than Yuenglings Ice. The otc stock trades about -0.07 of its potential returns per unit of risk. The Yuenglings Ice Cream is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Yuenglings Ice Cream on September 29, 2024 and sell it today you would earn a total of  0.06  from holding Yuenglings Ice Cream or generate 26.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Danone SA  vs.  Yuenglings Ice Cream

Danone SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danone SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Danone SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Yuenglings Ice Cream

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuenglings Ice Cream are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Yuenglings Ice displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danone SA and Yuenglings Ice

The main advantage of trading using opposite Danone SA and Yuenglings Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, Yuenglings Ice 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 Yuenglings Ice will offset losses from the drop in Yuenglings Ice's long position.

The idea behind Danone SA and Yuenglings Ice Cream pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..