Correlation Between Loblaw Companies and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and CapitaLand Investment 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 CapitaLand Investment 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 CapitaLand Investment Limited, you can compare the effects of market volatilities on Loblaw Companies and CapitaLand Investment 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 CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and CapitaLand Investment.
Diversification Opportunities for Loblaw Companies and CapitaLand Investment
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loblaw and CapitaLand is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment 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 CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Loblaw Companies and CapitaLand Investment
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.8 times more return on investment than CapitaLand Investment. However, Loblaw Companies Limited is 1.24 times less risky than CapitaLand Investment. It trades about 0.07 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.01 per unit of risk. If you would invest 8,255 in Loblaw Companies Limited on September 4, 2024 and sell it today you would earn a total of 3,945 from holding Loblaw Companies Limited or generate 47.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Loblaw Companies |
| CapitaLand Investment |
Loblaw Companies and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and CapitaLand Investment
The main advantage of trading using opposite Loblaw Companies and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| Loblaw Companies vs. NURAN WIRELESS INC | Loblaw Companies vs. VITEC SOFTWARE GROUP | Loblaw Companies vs. Citic Telecom International | Loblaw Companies vs. INTERSHOP Communications Aktiengesellschaft |
| CapitaLand Investment vs. DXC Technology Co | CapitaLand Investment vs. Vishay Intertechnology | CapitaLand Investment vs. JSC Halyk bank | CapitaLand Investment vs. Micron Technology |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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