Correlation Between Danone SA and Edison International
Can any of the company-specific risk be diversified away by investing in both Danone SA and Edison International 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 Edison International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Edison International, you can compare the effects of market volatilities on Danone SA and Edison International 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 Edison International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Edison International.
Diversification Opportunities for Danone SA and Edison International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danone and Edison is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Edison International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison International 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 Edison International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison International has no effect on the direction of Danone SA i.e., Danone SA and Edison International go up and down completely randomly.
Pair Corralation between Danone SA and Edison International
Assuming the 90 days trading horizon Danone SA is expected to generate 0.74 times more return on investment than Edison International. However, Danone SA is 1.35 times less risky than Edison International. It trades about -0.03 of its potential returns per unit of risk. Edison International is currently generating about -0.04 per unit of risk. If you would invest 7,488 in Danone SA on May 5, 2025 and sell it today you would lose (218.00) from holding Danone SA or give up 2.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Danone SA vs. Edison International
Performance |
Timeline |
Danone SA |
Edison International |
Danone SA and Edison International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Danone SA and Edison International
The main advantage of trading using opposite Danone SA and Edison International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, Edison International 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 Edison International will offset losses from the drop in Edison International's long position.Danone SA vs. ARDAGH METAL PACDL 0001 | Danone SA vs. PARKEN Sport Entertainment | Danone SA vs. USWE SPORTS AB | Danone SA vs. Fukuyama Transporting Co |
Edison International vs. COFCO Joycome Foods | Edison International vs. SOLSTAD OFFSHORE NK | Edison International vs. CanSino Biologics | Edison International vs. Solstad Offshore ASA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |