Correlation Between Leons Furniture and Diamond Fields
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Diamond Fields 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 Diamond Fields 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 Diamond Fields Resources, you can compare the effects of market volatilities on Leons Furniture and Diamond Fields 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 Diamond Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Diamond Fields.
Diversification Opportunities for Leons Furniture and Diamond Fields
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leons and Diamond is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields Resources 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 Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of Leons Furniture i.e., Leons Furniture and Diamond Fields go up and down completely randomly.
Pair Corralation between Leons Furniture and Diamond Fields
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the Diamond Fields. But the stock apears to be less risky and, when comparing its historical volatility, Leons Furniture Limited is 5.88 times less risky than Diamond Fields. The stock trades about -0.1 of its potential returns per unit of risk. The Diamond Fields Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Diamond Fields Resources on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Diamond Fields Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Leons Furniture Limited vs. Diamond Fields Resources
Performance |
| Timeline |
| Leons Furniture |
| Diamond Fields Resources |
Leons Furniture and Diamond Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Diamond Fields
The main advantage of trading using opposite Leons Furniture and Diamond Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Diamond Fields 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 Diamond Fields will offset losses from the drop in Diamond Fields' long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. Toromont Industries | Leons Furniture vs. iShares Canadian HYBrid |
| Diamond Fields vs. Capstone Mining Corp | Diamond Fields vs. US Financial 15 | Diamond Fields vs. Laurentian Bank | Diamond Fields vs. Endeavour Silver Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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