Correlation Between Lenta PLC and Sears Canada
Can any of the company-specific risk be diversified away by investing in both Lenta PLC and Sears Canada 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 Lenta PLC and Sears Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lenta PLC and Sears Canada, you can compare the effects of market volatilities on Lenta PLC and Sears Canada 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 Lenta PLC with a short position of Sears Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenta PLC and Sears Canada.
Diversification Opportunities for Lenta PLC and Sears Canada
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lenta and Sears is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Lenta PLC and Sears Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sears Canada and Lenta PLC 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 Lenta PLC are associated (or correlated) with Sears Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sears Canada has no effect on the direction of Lenta PLC i.e., Lenta PLC and Sears Canada go up and down completely randomly.
Pair Corralation between Lenta PLC and Sears Canada
If you would invest 0.01 in Sears Canada on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Sears Canada or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 20.0% |
| Values | Daily Returns |
Lenta PLC vs. Sears Canada
Performance |
| Timeline |
| Lenta PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sears Canada |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lenta PLC and Sears Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenta PLC and Sears Canada
The main advantage of trading using opposite Lenta PLC and Sears Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenta PLC position performs unexpectedly, Sears Canada 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 Sears Canada will offset losses from the drop in Sears Canada's long position.The idea behind Lenta PLC and Sears Canada pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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