Correlation Between Danone SA and Preferred Commerce
Can any of the company-specific risk be diversified away by investing in both Danone SA and Preferred Commerce 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 Preferred Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Preferred Commerce, you can compare the effects of market volatilities on Danone SA and Preferred Commerce 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 Preferred Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Preferred Commerce.
Diversification Opportunities for Danone SA and Preferred Commerce
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danone and Preferred is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Preferred Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Commerce 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 Preferred Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Commerce has no effect on the direction of Danone SA i.e., Danone SA and Preferred Commerce go up and down completely randomly.
Pair Corralation between Danone SA and Preferred Commerce
Assuming the 90 days horizon Danone SA is expected to generate 3.48 times less return on investment than Preferred Commerce. But when comparing it to its historical volatility, Danone SA is 14.53 times less risky than Preferred Commerce. It trades about 0.1 of its potential returns per unit of risk. Preferred Commerce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Preferred Commerce on August 29, 2025 and sell it today you would lose (11.00) from holding Preferred Commerce or give up 52.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. Preferred Commerce
Performance |
| Timeline |
| Danone SA |
| Preferred Commerce |
Danone SA and Preferred Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and Preferred Commerce
The main advantage of trading using opposite Danone SA and Preferred Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, Preferred Commerce 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 Preferred Commerce will offset losses from the drop in Preferred Commerce's long position.| Danone SA vs. Take Two Interactive Software | Danone SA vs. Magic Software Enterprises | Danone SA vs. Kingdee International Software | Danone SA vs. SoftwareONE Holding AG |
| Preferred Commerce vs. Roadrunner Transportation Systems | Preferred Commerce vs. Computershare Ltd ADR | Preferred Commerce vs. ISPAF | Preferred Commerce vs. Altigen Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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