Correlation Between De Grey and La Z
Can any of the company-specific risk be diversified away by investing in both De Grey and La Z 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 De Grey and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and La Z Boy Incorporated, you can compare the effects of market volatilities on De Grey and La Z 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 De Grey with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and La Z.
Diversification Opportunities for De Grey and La Z
Poor diversification
The 3 months correlation between DGD and LAZ is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy and De Grey 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 De Grey Mining are associated (or correlated) with La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of De Grey i.e., De Grey and La Z go up and down completely randomly.
Pair Corralation between De Grey and La Z
Assuming the 90 days trading horizon De Grey is expected to generate 1.92 times less return on investment than La Z. In addition to that, De Grey is 1.51 times more volatile than La Z Boy Incorporated. It trades about 0.02 of its total potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.07 per unit of volatility. If you would invest 2,250 in La Z Boy Incorporated on October 11, 2024 and sell it today you would earn a total of 1,910 from holding La Z Boy Incorporated or generate 84.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. La Z Boy Incorporated
Performance |
| Timeline |
| De Grey Mining |
| La Z Boy |
De Grey and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and La Z
The main advantage of trading using opposite De Grey and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z's long position.| De Grey vs. CarsalesCom | De Grey vs. KENEDIX OFFICE INV | De Grey vs. ADRIATIC METALS LS 013355 | De Grey vs. ARDAGH METAL PACDL 0001 |
| La Z vs. Chesapeake Utilities | La Z vs. ADRIATIC METALS LS 013355 | La Z vs. Corporate Travel Management | La Z vs. De Grey Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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