Correlation Between Latitude Financial and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Latitude Financial and Collins Foods 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 Latitude Financial and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latitude Financial Services and Collins Foods, you can compare the effects of market volatilities on Latitude Financial and Collins Foods 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 Latitude Financial with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latitude Financial and Collins Foods.
Diversification Opportunities for Latitude Financial and Collins Foods
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Latitude and Collins is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Latitude Financial Services and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Latitude Financial 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 Latitude Financial Services are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Latitude Financial i.e., Latitude Financial and Collins Foods go up and down completely randomly.
Pair Corralation between Latitude Financial and Collins Foods
Assuming the 90 days trading horizon Latitude Financial is expected to generate 356.25 times less return on investment than Collins Foods. But when comparing it to its historical volatility, Latitude Financial Services is 4.73 times less risky than Collins Foods. It trades about 0.0 of its potential returns per unit of risk. Collins Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 733.00 in Collins Foods on November 3, 2024 and sell it today you would earn a total of 21.00 from holding Collins Foods or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Latitude Financial Services vs. Collins Foods
Performance |
| Timeline |
| Latitude Financial |
| Collins Foods |
Latitude Financial and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latitude Financial and Collins Foods
The main advantage of trading using opposite Latitude Financial and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latitude Financial position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Latitude Financial vs. Microequities Asset Management | Latitude Financial vs. Aristocrat Leisure | Latitude Financial vs. Autosports Group | Latitude Financial vs. Beam Communications Holdings |
| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Macquarie Group | Collins Foods vs. Macquarie Group Ltd | Collins Foods vs. Challenger |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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