Correlation Between Alfa Financial and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Leggett Platt, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Leggett Platt.
Diversification Opportunities for Alfa Financial and Leggett Platt
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and Leggett is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Leggett Platt go up and down completely randomly.
Pair Corralation between Alfa Financial and Leggett Platt
Assuming the 90 days trading horizon Alfa Financial is expected to generate 3.42 times less return on investment than Leggett Platt. But when comparing it to its historical volatility, Alfa Financial Software is 1.48 times less risky than Leggett Platt. It trades about 0.09 of its potential returns per unit of risk. Leggett Platt is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 968.00 in Leggett Platt on November 3, 2024 and sell it today you would earn a total of 106.00 from holding Leggett Platt or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Leggett Platt
Performance |
| Timeline |
| Alfa Financial Software |
| Leggett Platt |
Alfa Financial and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Leggett Platt
The main advantage of trading using opposite Alfa Financial and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. iShares Physical Silver | Alfa Financial vs. Infrastrutture Wireless Italiane | Alfa Financial vs. Coeur Mining | Alfa Financial vs. Ecclesiastical Insurance Office |
| Leggett Platt vs. Software Circle plc | Leggett Platt vs. Monster Beverage Corp | Leggett Platt vs. Impax Asset Management | Leggett Platt vs. Coor Service Management |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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