Correlation Between Leons Furniture and Goodfellow
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Goodfellow 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 Goodfellow 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 Goodfellow, you can compare the effects of market volatilities on Leons Furniture and Goodfellow 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 Goodfellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Goodfellow.
Diversification Opportunities for Leons Furniture and Goodfellow
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leons and Goodfellow is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow 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 Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Leons Furniture i.e., Leons Furniture and Goodfellow go up and down completely randomly.
Pair Corralation between Leons Furniture and Goodfellow
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the Goodfellow. But the stock apears to be less risky and, when comparing its historical volatility, Leons Furniture Limited is 1.09 times less risky than Goodfellow. The stock trades about -0.15 of its potential returns per unit of risk. The Goodfellow is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,371 in Goodfellow on August 29, 2024 and sell it today you would earn a total of 16.00 from holding Goodfellow or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Goodfellow
Performance |
| Timeline |
| Leons Furniture |
| Goodfellow |
Leons Furniture and Goodfellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Goodfellow
The main advantage of trading using opposite Leons Furniture and Goodfellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Goodfellow 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 Goodfellow will offset losses from the drop in Goodfellow's long position.| Leons Furniture vs. Telus Corp | Leons Furniture vs. Toronto Dominion Bank | Leons Furniture vs. Manulife Financial Corp | Leons Furniture vs. Canadian Natural Resources |
| Goodfellow vs. Algoma Central | Goodfellow vs. Taiga Building Products | Goodfellow vs. Conifex Timber | Goodfellow vs. Acadian Timber 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |