Correlation Between Right On and Danone SA

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

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

Diversification Opportunities for Right On and Danone SA

0.68

Correlation Coefficient

Right On  Danone SA

Poor diversification

The 3 months correlation between Right and Danone is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Right On Brands and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Right On 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 Right On Brands 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 Right On i.e., Right On and Danone SA go up and down completely randomly.

Pair Corralation between Right On and Danone SA

Given the investment horizon of 90 days Right On Brands is expected to generate 25.45 times more return on investment than Danone SA. However, Right On is 25.45 times more volatile than Danone SA. It trades about 0.12 of its potential returns per unit of risk. Danone SA is currently generating about 0.04 per unit of risk. If you would invest  5.00  in Right On Brands on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Right On Brands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.13%
Values	Daily Returns

Right On Brands  vs.  Danone SA

Right On Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Right On Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Right On displayed solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Right On and Danone SA

The main advantage of trading using opposite Right On and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Right On 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.

The idea behind Right On Brands and Danone SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.