Correlation Between Leons Furniture and Canyon Creek
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Canyon Creek 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 Canyon Creek 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 Canyon Creek Food, you can compare the effects of market volatilities on Leons Furniture and Canyon Creek 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 Canyon Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Canyon Creek.
Diversification Opportunities for Leons Furniture and Canyon Creek
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leons and Canyon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Canyon Creek Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canyon Creek 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 Canyon Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canyon Creek Food has no effect on the direction of Leons Furniture i.e., Leons Furniture and Canyon Creek go up and down completely randomly.
Pair Corralation between Leons Furniture and Canyon Creek
Assuming the 90 days trading horizon Leons Furniture is expected to generate 6.59 times less return on investment than Canyon Creek. But when comparing it to its historical volatility, Leons Furniture Limited is 6.71 times less risky than Canyon Creek. It trades about 0.06 of its potential returns per unit of risk. Canyon Creek Food is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Canyon Creek Food on October 7, 2024 and sell it today you would lose (1.00) from holding Canyon Creek Food or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Leons Furniture Limited vs. Canyon Creek Food
Performance |
| Timeline |
| Leons Furniture |
| Canyon Creek Food |
Leons Furniture and Canyon Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Canyon Creek
The main advantage of trading using opposite Leons Furniture and Canyon Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Canyon Creek 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 Canyon Creek will offset losses from the drop in Canyon Creek's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| Canyon Creek vs. Canaf Investments | Canyon Creek vs. Lion One Metals | Canyon Creek vs. TGS Esports | Canyon Creek vs. Boat Rocker Media |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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