Correlation Between VITEC SOFTWARE and Loblaw Companies
Can any of the company-specific risk be diversified away by investing in both VITEC SOFTWARE and Loblaw Companies 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 VITEC SOFTWARE and Loblaw Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VITEC SOFTWARE GROUP and Loblaw Companies Limited, you can compare the effects of market volatilities on VITEC SOFTWARE and Loblaw Companies 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 VITEC SOFTWARE with a short position of Loblaw Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITEC SOFTWARE and Loblaw Companies.
Diversification Opportunities for VITEC SOFTWARE and Loblaw Companies
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VITEC and Loblaw is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies and VITEC SOFTWARE 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 VITEC SOFTWARE GROUP are associated (or correlated) with Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of VITEC SOFTWARE i.e., VITEC SOFTWARE and Loblaw Companies go up and down completely randomly.
Pair Corralation between VITEC SOFTWARE and Loblaw Companies
Assuming the 90 days horizon VITEC SOFTWARE is expected to generate 1.39 times less return on investment than Loblaw Companies. In addition to that, VITEC SOFTWARE is 1.77 times more volatile than Loblaw Companies Limited. It trades about 0.03 of its total potential returns per unit of risk. Loblaw Companies Limited is currently generating about 0.07 per unit of volatility. If you would invest 8,255 in Loblaw Companies Limited on September 4, 2024 and sell it today you would earn a total of 4,145 from holding Loblaw Companies Limited or generate 50.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VITEC SOFTWARE GROUP vs. Loblaw Companies Limited
Performance |
| Timeline |
| VITEC SOFTWARE GROUP |
| Loblaw Companies |
VITEC SOFTWARE and Loblaw Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VITEC SOFTWARE and Loblaw Companies
The main advantage of trading using opposite VITEC SOFTWARE and Loblaw Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITEC SOFTWARE position performs unexpectedly, Loblaw Companies 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 Loblaw Companies will offset losses from the drop in Loblaw Companies' long position.| VITEC SOFTWARE vs. Apple Inc | VITEC SOFTWARE vs. Apple Inc | VITEC SOFTWARE vs. Apple Inc | VITEC SOFTWARE vs. Apple Inc |
| Loblaw Companies vs. NURAN WIRELESS INC | Loblaw Companies vs. VITEC SOFTWARE GROUP | Loblaw Companies vs. Citic Telecom International | Loblaw Companies vs. INTERSHOP Communications Aktiengesellschaft |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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