Correlation Between Leons Furniture and East Side
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and East Side 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 East Side 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 East Side Games, you can compare the effects of market volatilities on Leons Furniture and East Side 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 East Side. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and East Side.
Diversification Opportunities for Leons Furniture and East Side
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leons and East is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and East Side Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Side Games 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 East Side. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Side Games has no effect on the direction of Leons Furniture i.e., Leons Furniture and East Side go up and down completely randomly.
Pair Corralation between Leons Furniture and East Side
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 0.45 times more return on investment than East Side. However, Leons Furniture Limited is 2.23 times less risky than East Side. It trades about 0.1 of its potential returns per unit of risk. East Side Games is currently generating about -0.04 per unit of risk. If you would invest 2,182 in Leons Furniture Limited on September 1, 2024 and sell it today you would earn a total of 530.00 from holding Leons Furniture Limited or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. East Side Games
Performance |
| Timeline |
| Leons Furniture |
| East Side Games |
Leons Furniture and East Side Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and East Side
The main advantage of trading using opposite Leons Furniture and East Side positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, East Side 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 East Side will offset losses from the drop in East Side's long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| East Side vs. JPMorgan Chase Co | East Side vs. Bank of America | East Side vs. Royal Bank of | East Side vs. Royal Bank of |
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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