Correlation Between Lennox International and Compagnie
Can any of the company-specific risk be diversified away by investing in both Lennox International and Compagnie 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 Lennox International and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and Compagnie de Saint Gobain, you can compare the effects of market volatilities on Lennox International and Compagnie 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 Lennox International with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and Compagnie.
Diversification Opportunities for Lennox International and Compagnie
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lennox and Compagnie is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and Lennox International 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 Lennox International are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Lennox International i.e., Lennox International and Compagnie go up and down completely randomly.
Pair Corralation between Lennox International and Compagnie
Considering the 90-day investment horizon Lennox International is expected to generate 1.85 times more return on investment than Compagnie. However, Lennox International is 1.85 times more volatile than Compagnie de Saint Gobain. It trades about 0.27 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.23 per unit of risk. If you would invest 61,264 in Lennox International on August 27, 2024 and sell it today you would earn a total of 6,579 from holding Lennox International or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lennox International vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Lennox International |
| Compagnie de Saint |
Lennox International and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and Compagnie
The main advantage of trading using opposite Lennox International and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Lennox International vs. Carrier Global Corp | Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International vs. Carlisle Companies Incorporated |
| Compagnie vs. Antelope Enterprise Holdings | Compagnie vs. Azek Company | Compagnie vs. AAON Inc | Compagnie vs. GMS Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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