Correlation Between Legal General and Celsius Holdings
Can any of the company-specific risk be diversified away by investing in both Legal General and Celsius Holdings 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 Legal General and Celsius Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General Group and Celsius Holdings, you can compare the effects of market volatilities on Legal General and Celsius Holdings 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 Legal General with a short position of Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Celsius Holdings.
Diversification Opportunities for Legal General and Celsius Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legal and Celsius is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Legal General Group and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Legal General 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 Legal General Group are associated (or correlated) with Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Legal General i.e., Legal General and Celsius Holdings go up and down completely randomly.
Pair Corralation between Legal General and Celsius Holdings
Assuming the 90 days horizon Legal General Group is expected to generate 0.32 times more return on investment than Celsius Holdings. However, Legal General Group is 3.11 times less risky than Celsius Holdings. It trades about -0.06 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.1 per unit of risk. If you would invest 1,440 in Legal General Group on September 4, 2024 and sell it today you would lose (22.00) from holding Legal General Group or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General Group vs. Celsius Holdings
Performance |
| Timeline |
| Legal General Group |
| Celsius Holdings |
Legal General and Celsius Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Celsius Holdings
The main advantage of trading using opposite Legal General and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Celsius Holdings 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 Celsius Holdings will offset losses from the drop in Celsius Holdings' long position.| Legal General vs. United Guardian | Legal General vs. Patterson UTI Energy | Legal General vs. Ecoloclean Industrs | Legal General vs. Academy Sports Outdoors |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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