Correlation Between Latitude Financial and Cochlear
Can any of the company-specific risk be diversified away by investing in both Latitude Financial and Cochlear 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 Cochlear 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 Cochlear, you can compare the effects of market volatilities on Latitude Financial and Cochlear 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 Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latitude Financial and Cochlear.
Diversification Opportunities for Latitude Financial and Cochlear
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Latitude and Cochlear is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Latitude Financial Services and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear 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 Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Latitude Financial i.e., Latitude Financial and Cochlear go up and down completely randomly.
Pair Corralation between Latitude Financial and Cochlear
Assuming the 90 days trading horizon Latitude Financial is expected to generate 94.2 times less return on investment than Cochlear. But when comparing it to its historical volatility, Latitude Financial Services is 1.38 times less risky than Cochlear. It trades about 0.0 of its potential returns per unit of risk. Cochlear is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 28,567 in Cochlear on August 30, 2024 and sell it today you would earn a total of 2,200 from holding Cochlear or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Latitude Financial Services vs. Cochlear
Performance |
| Timeline |
| Latitude Financial |
| Cochlear |
Latitude Financial and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latitude Financial and Cochlear
The main advantage of trading using opposite Latitude Financial and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latitude Financial position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Latitude Financial vs. Treasury Wine Estates | Latitude Financial vs. BKI Investment | Latitude Financial vs. Australian United Investment | Latitude Financial vs. Nine Entertainment Co |
| Cochlear vs. Janison Education Group | Cochlear vs. TPG Telecom | Cochlear vs. Nufarm Finance NZ | Cochlear vs. Centuria Industrial Reit |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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