Correlation Between Superior Plus and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Leggett Platt 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 Superior Plus and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Leggett Platt Incorporated, you can compare the effects of market volatilities on Superior Plus and Leggett Platt 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 Superior Plus with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Leggett Platt.
Diversification Opportunities for Superior Plus and Leggett Platt
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Superior and Leggett is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Superior Plus i.e., Superior Plus and Leggett Platt go up and down completely randomly.
Pair Corralation between Superior Plus and Leggett Platt
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Leggett Platt. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 1.1 times less risky than Leggett Platt. The stock trades about -0.06 of its potential returns per unit of risk. The Leggett Platt Incorporated is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,070 in Leggett Platt Incorporated on September 15, 2024 and sell it today you would earn a total of 16.00 from holding Leggett Platt Incorporated or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Superior Plus Corp |
| Leggett Platt |
Superior Plus and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Leggett Platt
The main advantage of trading using opposite Superior Plus and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Superior Plus vs. Nissan Chemical Corp | Superior Plus vs. Japan Medical Dynamic | Superior Plus vs. Sanyo Chemical Industries | Superior Plus vs. MeVis Medical Solutions |
| Leggett Platt vs. Superior Plus Corp | Leggett Platt vs. SIVERS SEMICONDUCTORS AB | Leggett Platt vs. NorAm Drilling AS | Leggett Platt vs. Norsk Hydro ASA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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