Correlation Between Cardano and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Leggett Platt Incorporated, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Leggett Platt.
Diversification Opportunities for Cardano and Leggett Platt
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardano and Leggett is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Leggett Platt Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Cardano 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 Cardano 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 Cardano i.e., Cardano and Leggett Platt go up and down completely randomly.
Pair Corralation between Cardano and Leggett Platt
Assuming the 90 days trading horizon Cardano is expected to generate 2.36 times more return on investment than Leggett Platt. However, Cardano is 2.36 times more volatile than Leggett Platt Incorporated. It trades about 0.19 of its potential returns per unit of risk. Leggett Platt Incorporated is currently generating about -0.03 per unit of risk. If you would invest 32.00 in Cardano on November 2, 2024 and sell it today you would earn a total of 64.00 from holding Cardano or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.26% |
| Values | Daily Returns |
Cardano vs. Leggett Platt Incorporated
Performance |
| Timeline |
| Cardano |
| Leggett Platt |
Cardano and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Leggett Platt
The main advantage of trading using opposite Cardano and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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.The idea behind Cardano and Leggett Platt Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Leggett Platt vs. Mohawk Industries | Leggett Platt vs. Tempur Sealy International | Leggett Platt vs. Ethan Allen Interiors | Leggett Platt vs. The Lovesac |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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