Correlation Between East Side and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both East Side and Leons Furniture 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 East Side and Leons Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Side Games and Leons Furniture Limited, you can compare the effects of market volatilities on East Side and Leons Furniture 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 East Side with a short position of Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Leons Furniture.
Diversification Opportunities for East Side and Leons Furniture
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between East and Leons is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture and East Side 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 East Side Games are associated (or correlated) with Leons Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leons Furniture has no effect on the direction of East Side i.e., East Side and Leons Furniture go up and down completely randomly.
Pair Corralation between East Side and Leons Furniture
Assuming the 90 days trading horizon East Side Games is expected to under-perform the Leons Furniture. In addition to that, East Side is 2.23 times more volatile than Leons Furniture Limited. It trades about -0.04 of its total potential returns per unit of risk. Leons Furniture Limited is currently generating about 0.1 per unit of volatility. If you would invest 2,182 in Leons Furniture Limited on September 1, 2024 and sell it today you would earn a total of 530.00 from holding Leons Furniture Limited or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Side Games vs. Leons Furniture Limited
Performance |
| Timeline |
| East Side Games |
| Leons Furniture |
East Side and Leons Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Side and Leons Furniture
The main advantage of trading using opposite East Side and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side position performs unexpectedly, Leons Furniture 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 Leons Furniture will offset losses from the drop in Leons Furniture's long position.| East Side vs. JPMorgan Chase Co | East Side vs. Bank of America | East Side vs. Royal Bank of | East Side vs. Royal Bank of |
| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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