Correlation Between Howden Joinery and LBG Media
Can any of the company-specific risk be diversified away by investing in both Howden Joinery and LBG Media 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 Howden Joinery and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Howden Joinery Group and LBG Media PLC, you can compare the effects of market volatilities on Howden Joinery and LBG Media 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 Howden Joinery with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Howden Joinery and LBG Media.
Diversification Opportunities for Howden Joinery and LBG Media
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Howden and LBG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Howden Joinery Group and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Howden Joinery 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 Howden Joinery Group are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Howden Joinery i.e., Howden Joinery and LBG Media go up and down completely randomly.
Pair Corralation between Howden Joinery and LBG Media
Assuming the 90 days trading horizon Howden Joinery Group is expected to generate 1.0 times more return on investment than LBG Media. However, Howden Joinery is 1.0 times more volatile than LBG Media PLC. It trades about 0.0 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.09 per unit of risk. If you would invest 78,950 in Howden Joinery Group on October 23, 2024 and sell it today you would lose (250.00) from holding Howden Joinery Group or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Howden Joinery Group vs. LBG Media PLC
Performance |
| Timeline |
| Howden Joinery Group |
| LBG Media PLC |
Howden Joinery and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Howden Joinery and LBG Media
The main advantage of trading using opposite Howden Joinery and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Howden Joinery position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Howden Joinery vs. GreenX Metals | Howden Joinery vs. BW Offshore | Howden Joinery vs. AMG Advanced Metallurgical | Howden Joinery vs. Jacquet Metal Service |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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