Correlation Between Leons Furniture and DRI Healthcare
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and DRI Healthcare 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 DRI Healthcare 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 DRI Healthcare Trust, you can compare the effects of market volatilities on Leons Furniture and DRI Healthcare 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 DRI Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and DRI Healthcare.
Diversification Opportunities for Leons Furniture and DRI Healthcare
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leons and DRI is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and DRI Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRI Healthcare Trust 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 DRI Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRI Healthcare Trust has no effect on the direction of Leons Furniture i.e., Leons Furniture and DRI Healthcare go up and down completely randomly.
Pair Corralation between Leons Furniture and DRI Healthcare
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 0.71 times more return on investment than DRI Healthcare. However, Leons Furniture Limited is 1.41 times less risky than DRI Healthcare. It trades about 0.04 of its potential returns per unit of risk. DRI Healthcare Trust is currently generating about -0.22 per unit of risk. If you would invest 2,683 in Leons Furniture Limited on September 1, 2024 and sell it today you would earn a total of 29.00 from holding Leons Furniture Limited or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. DRI Healthcare Trust
Performance |
| Timeline |
| Leons Furniture |
| DRI Healthcare Trust |
Leons Furniture and DRI Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and DRI Healthcare
The main advantage of trading using opposite Leons Furniture and DRI Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, DRI Healthcare 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 DRI Healthcare will offset losses from the drop in DRI Healthcare's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| DRI Healthcare vs. iShares Canadian HYBrid | DRI Healthcare vs. Altagas Cum Red | DRI Healthcare vs. European Residential Real | DRI Healthcare vs. iShares Fundamental Hedged |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |