Correlation Between Kerry Group and Danone SA
Can any of the company-specific risk be diversified away by investing in both Kerry Group and Danone 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 Kerry Group and Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group plc and Danone SA, you can compare the effects of market volatilities on Kerry Group and Danone 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 Kerry Group with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Danone SA.
Diversification Opportunities for Kerry Group and Danone SA
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kerry and Danone is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group plc and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Kerry Group 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 Kerry Group plc are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Kerry Group i.e., Kerry Group and Danone SA go up and down completely randomly.
Pair Corralation between Kerry Group and Danone SA
Assuming the 90 days horizon Kerry Group plc is expected to generate 1.35 times more return on investment than Danone SA. However, Kerry Group is 1.35 times more volatile than Danone SA. It trades about 0.03 of its potential returns per unit of risk. Danone SA is currently generating about -0.09 per unit of risk. If you would invest 8,628 in Kerry Group plc on January 24, 2024 and sell it today you would earn a total of 193.00 from holding Kerry Group plc or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry Group plc vs. Danone SA
Performance |
| Timeline |
| Kerry Group plc |
| Danone SA |
Kerry Group and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Danone SA
The main advantage of trading using opposite Kerry Group and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Danone 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 Danone SA will offset losses from the drop in Danone SA's long position.| Kerry Group vs. Kellanova | Kerry Group vs. Lancaster Colony | Kerry Group vs. The A2 Milk | Kerry Group vs. Artisan Consumer Goods |
| Danone SA vs. Kellanova | Danone SA vs. Lancaster Colony | Danone SA vs. The A2 Milk | Danone SA vs. Artisan Consumer Goods |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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