Correlation Between Science Applications and Lennox International
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Lennox International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Lennox International, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Lennox International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Lennox International.
Diversification Opportunities for Science Applications and Lennox International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Science and Lennox is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Lennox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennox International and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Lennox International go up and down completely randomly.
Pair Corralation between Science Applications and Lennox International
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Lennox International. In addition to that, Science Applications is 1.98 times more volatile than Lennox International. It trades about -0.3 of its total potential returns per unit of risk. Lennox International is currently generating about 0.19 per unit of volatility. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Lennox International
Performance |
| Timeline |
| Science Applications |
| Lennox International |
Science Applications and Lennox International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Lennox International
The main advantage of trading using opposite Science Applications and Lennox International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation Software |
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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 Directory module to find actively traded commodities issued by global exchanges.
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