Correlation Between High Liner and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both High Liner 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 High Liner and Leons Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Leons Furniture Limited, you can compare the effects of market volatilities on High Liner 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 High Liner with a short position of Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Leons Furniture.
Diversification Opportunities for High Liner and Leons Furniture
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and Leons is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture and High Liner 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 High Liner Foods 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 High Liner i.e., High Liner and Leons Furniture go up and down completely randomly.
Pair Corralation between High Liner and Leons Furniture
Assuming the 90 days trading horizon High Liner Foods is expected to generate 1.36 times more return on investment than Leons Furniture. However, High Liner is 1.36 times more volatile than Leons Furniture Limited. It trades about 0.37 of its potential returns per unit of risk. Leons Furniture Limited is currently generating about -0.11 per unit of risk. If you would invest 1,325 in High Liner Foods on August 24, 2024 and sell it today you would earn a total of 200.00 from holding High Liner Foods or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Leons Furniture Limited
Performance |
| Timeline |
| High Liner Foods |
| Leons Furniture |
High Liner and Leons Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Leons Furniture
The main advantage of trading using opposite High Liner and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Exco Technologies Limited |
| Leons Furniture vs. Restaurant Brands International | Leons Furniture vs. Enghouse Systems | Leons Furniture vs. Metro Inc | Leons Furniture vs. goeasy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |