Correlation Between Leons Furniture and A W
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and A W 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 A W 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 A W FOOD, you can compare the effects of market volatilities on Leons Furniture and A W 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 A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and A W.
Diversification Opportunities for Leons Furniture and A W
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leons and A W is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD 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 A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Leons Furniture i.e., Leons Furniture and A W go up and down completely randomly.
Pair Corralation between Leons Furniture and A W
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 1.19 times more return on investment than A W. However, Leons Furniture is 1.19 times more volatile than A W FOOD. It trades about -0.18 of its potential returns per unit of risk. A W FOOD is currently generating about -0.23 per unit of risk. If you would invest 2,650 in Leons Furniture Limited on October 12, 2024 and sell it today you would lose (120.00) from holding Leons Furniture Limited or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. A W FOOD
Performance |
| Timeline |
| Leons Furniture |
| A W FOOD |
Leons Furniture and A W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and A W
The main advantage of trading using opposite Leons Furniture and A W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, A W 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 A W will offset losses from the drop in A W's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| A W vs. CI Financial Corp | A W vs. Leons Furniture Limited | A W vs. Cogeco Communications | A W vs. 2028 Investment Grade |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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