Correlation Between LGL and Celestica
Can any of the company-specific risk be diversified away by investing in both LGL and Celestica 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 LGL and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGL Group and Celestica, you can compare the effects of market volatilities on LGL and Celestica 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 LGL with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGL and Celestica.
Diversification Opportunities for LGL and Celestica
Average diversification
The 3 months correlation between LGL and Celestica is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LGL Group and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and LGL 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 LGL Group are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of LGL i.e., LGL and Celestica go up and down completely randomly.
Pair Corralation between LGL and Celestica
Considering the 90-day investment horizon LGL is expected to generate 13.94 times less return on investment than Celestica. But when comparing it to its historical volatility, LGL Group is 1.45 times less risky than Celestica. It trades about 0.03 of its potential returns per unit of risk. Celestica is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,978 in Celestica on August 31, 2024 and sell it today you would earn a total of 1,338 from holding Celestica or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGL Group vs. Celestica
Performance |
| Timeline |
| LGL Group |
| Celestica |
LGL and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGL and Celestica
The main advantage of trading using opposite LGL and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGL position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.The idea behind LGL Group and Celestica 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.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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