Correlation Between Latitude Financial and Toys R
Can any of the company-specific risk be diversified away by investing in both Latitude Financial and Toys R 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 Toys R 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 Toys R Us, you can compare the effects of market volatilities on Latitude Financial and Toys R 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 Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latitude Financial and Toys R.
Diversification Opportunities for Latitude Financial and Toys R
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Latitude and Toys is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Latitude Financial Services and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us 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 Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of Latitude Financial i.e., Latitude Financial and Toys R go up and down completely randomly.
Pair Corralation between Latitude Financial and Toys R
Assuming the 90 days trading horizon Latitude Financial Services is expected to under-perform the Toys R. But the stock apears to be less risky and, when comparing its historical volatility, Latitude Financial Services is 11.32 times less risky than Toys R. The stock trades about -0.01 of its potential returns per unit of risk. The Toys R Us is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Toys R Us on September 12, 2024 and sell it today you would lose (9.10) from holding Toys R Us or give up 65.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Latitude Financial Services vs. Toys R Us
Performance |
| Timeline |
| Latitude Financial |
| Toys R Us |
Latitude Financial and Toys R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latitude Financial and Toys R
The main advantage of trading using opposite Latitude Financial and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latitude Financial position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R's long position.| Latitude Financial vs. Aneka Tambang Tbk | Latitude Financial vs. Commonwealth Bank | Latitude Financial vs. BHP Group Limited | Latitude Financial vs. Rio Tinto |
| Toys R vs. Beston Global Food | Toys R vs. Computershare | Toys R vs. RLF AgTech | Toys R vs. Macquarie Technology Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |