Correlation Between Coor Service and Legal General
Can any of the company-specific risk be diversified away by investing in both Coor Service and Legal General 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 Coor Service and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coor Service Management and Legal General Group, you can compare the effects of market volatilities on Coor Service and Legal General 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 Coor Service with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coor Service and Legal General.
Diversification Opportunities for Coor Service and Legal General
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coor and Legal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group and Coor Service 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 Coor Service Management are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Coor Service i.e., Coor Service and Legal General go up and down completely randomly.
Pair Corralation between Coor Service and Legal General
Assuming the 90 days trading horizon Coor Service Management is expected to under-perform the Legal General. In addition to that, Coor Service is 1.24 times more volatile than Legal General Group. It trades about -0.03 of its total potential returns per unit of risk. Legal General Group is currently generating about 0.01 per unit of volatility. If you would invest 21,786 in Legal General Group on September 3, 2024 and sell it today you would earn a total of 344.00 from holding Legal General Group or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Coor Service Management vs. Legal General Group
Performance |
| Timeline |
| Coor Service Management |
| Legal General Group |
Coor Service and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coor Service and Legal General
The main advantage of trading using opposite Coor Service and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Coor Service vs. Spirent Communications plc | Coor Service vs. Coeur Mining | Coor Service vs. Beowulf Mining | Coor Service vs. Invesco Physical Silver |
| Legal General vs. Greenroc Mining PLC | Legal General vs. GoldMining | Legal General vs. GlobalData PLC | Legal General vs. Blackrock World Mining |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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