Correlation Between Neinor Homes and LEGAL GENERAL
Can any of the company-specific risk be diversified away by investing in both Neinor Homes 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 Neinor Homes and LEGAL GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and LEGAL GENERAL, you can compare the effects of market volatilities on Neinor Homes 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 Neinor Homes with a short position of LEGAL GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and LEGAL GENERAL.
Diversification Opportunities for Neinor Homes and LEGAL GENERAL
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Neinor and LEGAL is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL and Neinor Homes 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 Neinor Homes SA 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 has no effect on the direction of Neinor Homes i.e., Neinor Homes and LEGAL GENERAL go up and down completely randomly.
Pair Corralation between Neinor Homes and LEGAL GENERAL
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 1.03 times more return on investment than LEGAL GENERAL. However, Neinor Homes is 1.03 times more volatile than LEGAL GENERAL. It trades about 0.49 of its potential returns per unit of risk. LEGAL GENERAL is currently generating about -0.25 per unit of risk. If you would invest 1,490 in Neinor Homes SA on October 12, 2024 and sell it today you would earn a total of 188.00 from holding Neinor Homes SA or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. LEGAL GENERAL
Performance |
| Timeline |
| Neinor Homes SA |
| LEGAL GENERAL |
Neinor Homes and LEGAL GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and LEGAL GENERAL
The main advantage of trading using opposite Neinor Homes and LEGAL GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes 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.| Neinor Homes vs. Tencent Music Entertainment | Neinor Homes vs. 24SEVENOFFICE GROUP AB | Neinor Homes vs. MAVEN WIRELESS SWEDEN | Neinor Homes vs. Suntory Beverage Food |
| LEGAL GENERAL vs. Neinor Homes SA | LEGAL GENERAL vs. USWE SPORTS AB | LEGAL GENERAL vs. Corporate Office Properties | LEGAL GENERAL vs. Beazer Homes USA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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