Correlation Between Cebu Air and LOWES
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By analyzing existing cross correlation between Cebu Air ADR and LOWES INC 6875, you can compare the effects of market volatilities on Cebu Air and LOWES 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 Cebu Air with a short position of LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and LOWES.
Diversification Opportunities for Cebu Air and LOWES
Very weak diversification
The 3 months correlation between Cebu and LOWES is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and LOWES INC 6875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 6875 and Cebu Air 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 Cebu Air ADR are associated (or correlated) with LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 6875 has no effect on the direction of Cebu Air i.e., Cebu Air and LOWES go up and down completely randomly.
Pair Corralation between Cebu Air and LOWES
Assuming the 90 days horizon Cebu Air ADR is expected to generate 9.93 times more return on investment than LOWES. However, Cebu Air is 9.93 times more volatile than LOWES INC 6875. It trades about 0.06 of its potential returns per unit of risk. LOWES INC 6875 is currently generating about -0.02 per unit of risk. If you would invest 150.00 in Cebu Air ADR on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Cebu Air ADR or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.27% |
| Values | Daily Returns |
Cebu Air ADR vs. LOWES INC 6875
Performance |
| Timeline |
| Cebu Air ADR |
| LOWES INC 6875 |
Cebu Air and LOWES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and LOWES
The main advantage of trading using opposite Cebu Air and LOWES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, LOWES 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 LOWES will offset losses from the drop in LOWES's long position.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| LOWES vs. QBE Insurance Group | LOWES vs. Shoe Carnival | LOWES vs. NI Holdings | LOWES vs. Employers Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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