Correlation Between Danone SA and WH Group
Can any of the company-specific risk be diversified away by investing in both Danone SA and WH Group 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 WH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and WH Group Limited, you can compare the effects of market volatilities on Danone SA and WH Group 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 WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and WH Group.
Diversification Opportunities for Danone SA and WH Group
Very good diversification
The 3 months correlation between Danone and WHGRF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Danone SA i.e., Danone SA and WH Group go up and down completely randomly.
Pair Corralation between Danone SA and WH Group
Assuming the 90 days horizon Danone SA is expected to under-perform the WH Group. But the otc stock apears to be less risky and, when comparing its historical volatility, Danone SA is 1.94 times less risky than WH Group. The otc stock trades about -0.15 of its potential returns per unit of risk. The WH Group Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 58.00 in WH Group Limited on January 20, 2024 and sell it today you would earn a total of 11.00 from holding WH Group Limited or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. WH Group Limited
Performance |
| Timeline |
| Danone SA |
| WH Group Limited |
Danone SA and WH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and WH Group
The main advantage of trading using opposite Danone SA and WH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, WH Group 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 WH Group will offset losses from the drop in WH Group's long position.| Danone SA vs. Kellanova | Danone SA vs. Lancaster Colony | Danone SA vs. The A2 Milk | Danone SA vs. Altavoz Entertainment |
| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
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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