Correlation Between Loblaw Companies and NTG Clarity
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and NTG Clarity 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 Loblaw Companies and NTG Clarity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loblaw Companies Limited and NTG Clarity Networks, you can compare the effects of market volatilities on Loblaw Companies and NTG Clarity 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 Loblaw Companies with a short position of NTG Clarity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and NTG Clarity.
Diversification Opportunities for Loblaw Companies and NTG Clarity
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loblaw and NTG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and NTG Clarity Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Clarity Networks and Loblaw Companies 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 Loblaw Companies Limited are associated (or correlated) with NTG Clarity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Clarity Networks has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and NTG Clarity go up and down completely randomly.
Pair Corralation between Loblaw Companies and NTG Clarity
Given the investment horizon of 90 days Loblaw Companies Limited is expected to under-perform the NTG Clarity. But the stock apears to be less risky and, when comparing its historical volatility, Loblaw Companies Limited is 4.66 times less risky than NTG Clarity. The stock trades about -0.02 of its potential returns per unit of risk. The NTG Clarity Networks is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 118.00 in NTG Clarity Networks on November 6, 2024 and sell it today you would earn a total of 62.00 from holding NTG Clarity Networks or generate 52.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. NTG Clarity Networks
Performance |
| Timeline |
| Loblaw Companies |
| NTG Clarity Networks |
Loblaw Companies and NTG Clarity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and NTG Clarity
The main advantage of trading using opposite Loblaw Companies and NTG Clarity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, NTG Clarity 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 NTG Clarity will offset losses from the drop in NTG Clarity's long position.| Loblaw Companies vs. Metro Inc | Loblaw Companies vs. George Weston Limited | Loblaw Companies vs. Canadian Tire | Loblaw Companies vs. Dollarama |
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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