Correlation Between GEELY AUTOMOBILE and LEONARDO DRS
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and LEONARDO DRS 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 GEELY AUTOMOBILE and LEONARDO DRS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and LEONARDO DRS INC, you can compare the effects of market volatilities on GEELY AUTOMOBILE and LEONARDO DRS 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 GEELY AUTOMOBILE with a short position of LEONARDO DRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and LEONARDO DRS.
Diversification Opportunities for GEELY AUTOMOBILE and LEONARDO DRS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEELY and LEONARDO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and LEONARDO DRS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEONARDO DRS INC and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with LEONARDO DRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEONARDO DRS INC has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and LEONARDO DRS go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and LEONARDO DRS
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the LEONARDO DRS. But the stock apears to be less risky and, when comparing its historical volatility, GEELY AUTOMOBILE is 2.12 times less risky than LEONARDO DRS. The stock trades about -0.17 of its potential returns per unit of risk. The LEONARDO DRS INC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,559 in LEONARDO DRS INC on August 29, 2024 and sell it today you would earn a total of 733.00 from holding LEONARDO DRS INC or generate 28.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. LEONARDO DRS INC
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| LEONARDO DRS INC |
GEELY AUTOMOBILE and LEONARDO DRS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and LEONARDO DRS
The main advantage of trading using opposite GEELY AUTOMOBILE and LEONARDO DRS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, LEONARDO DRS 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 LEONARDO DRS will offset losses from the drop in LEONARDO DRS's long position.| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Superior Plus Corp | GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB |
| LEONARDO DRS vs. Perseus Mining Limited | LEONARDO DRS vs. Perdoceo Education | LEONARDO DRS vs. GEELY AUTOMOBILE | LEONARDO DRS vs. Corporate Travel 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |