Correlation Between Leons Furniture and Alta Copper
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Alta Copper 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 Leons Furniture and Alta Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and Alta Copper Corp, you can compare the effects of market volatilities on Leons Furniture and Alta Copper 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 Leons Furniture with a short position of Alta Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Alta Copper.
Diversification Opportunities for Leons Furniture and Alta Copper
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leons and Alta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Alta Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Copper Corp and Leons Furniture 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 Leons Furniture Limited are associated (or correlated) with Alta Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Copper Corp has no effect on the direction of Leons Furniture i.e., Leons Furniture and Alta Copper go up and down completely randomly.
Pair Corralation between Leons Furniture and Alta Copper
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 0.44 times more return on investment than Alta Copper. However, Leons Furniture Limited is 2.26 times less risky than Alta Copper. It trades about 0.06 of its potential returns per unit of risk. Alta Copper Corp is currently generating about 0.01 per unit of risk. If you would invest 1,641 in Leons Furniture Limited on October 7, 2024 and sell it today you would earn a total of 998.00 from holding Leons Furniture Limited or generate 60.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Alta Copper Corp
Performance |
| Timeline |
| Leons Furniture |
| Alta Copper Corp |
Leons Furniture and Alta Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Alta Copper
The main advantage of trading using opposite Leons Furniture and Alta Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Alta Copper 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 Alta Copper will offset losses from the drop in Alta Copper's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| Alta Copper vs. Advent Wireless | Alta Copper vs. Quipt Home Medical | Alta Copper vs. Dream Office Real | Alta Copper vs. DIRTT Environmental Solutions |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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