Correlation Between Indutrade and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Indutrade and Leggett Platt 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 Indutrade and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Leggett Platt, you can compare the effects of market volatilities on Indutrade and Leggett Platt 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 Indutrade with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Leggett Platt.
Diversification Opportunities for Indutrade and Leggett Platt
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indutrade and Leggett is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Indutrade 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 Indutrade AB are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Indutrade i.e., Indutrade and Leggett Platt go up and down completely randomly.
Pair Corralation between Indutrade and Leggett Platt
Assuming the 90 days trading horizon Indutrade AB is expected to generate 0.53 times more return on investment than Leggett Platt. However, Indutrade AB is 1.89 times less risky than Leggett Platt. It trades about 0.03 of its potential returns per unit of risk. Leggett Platt is currently generating about -0.08 per unit of risk. If you would invest 26,197 in Indutrade AB on September 12, 2024 and sell it today you would earn a total of 2,453 from holding Indutrade AB or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Indutrade AB vs. Leggett Platt
Performance |
| Timeline |
| Indutrade AB |
| Leggett Platt |
Indutrade and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Leggett Platt
The main advantage of trading using opposite Indutrade and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Indutrade vs. Hong Kong Land | Indutrade vs. Neometals | Indutrade vs. Coor Service Management | Indutrade vs. Fidelity Sustainable USD |
| Leggett Platt vs. Melia Hotels | Leggett Platt vs. Indutrade AB | Leggett Platt vs. LPKF Laser Electronics | Leggett Platt vs. Flow Traders NV |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |