Correlation Between SHIP HEALTHCARE and Lennox International
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and Lennox International 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 SHIP HEALTHCARE and Lennox International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Lennox International, you can compare the effects of market volatilities on SHIP HEALTHCARE and Lennox International 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 SHIP HEALTHCARE with a short position of Lennox International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Lennox International.
Diversification Opportunities for SHIP HEALTHCARE and Lennox International
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIP and Lennox is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Lennox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennox International and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Lennox International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennox International has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Lennox International go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and Lennox International
Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 1.17 times less return on investment than Lennox International. But when comparing it to its historical volatility, SHIP HEALTHCARE HLDGINC is 1.45 times less risky than Lennox International. It trades about 0.24 of its potential returns per unit of risk. Lennox International is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 57,140 in Lennox International on September 14, 2024 and sell it today you would earn a total of 4,700 from holding Lennox International or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. Lennox International
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| Lennox International |
SHIP HEALTHCARE and Lennox International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and Lennox International
The main advantage of trading using opposite SHIP HEALTHCARE and Lennox International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, Lennox International 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 Lennox International will offset losses from the drop in Lennox International's long position.| SHIP HEALTHCARE vs. Superior Plus Corp | SHIP HEALTHCARE vs. NMI Holdings | SHIP HEALTHCARE vs. SIVERS SEMICONDUCTORS AB | SHIP HEALTHCARE vs. NorAm Drilling AS |
| Lennox International vs. NISSIN FOODS HLDGS | Lennox International vs. PREMIER FOODS | Lennox International vs. Dalata Hotel Group | Lennox International vs. NH HOTEL GROUP |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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