Correlation Between Leons Furniture and High Liner
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on Leons Furniture and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and High Liner.
Diversification Opportunities for Leons Furniture and High Liner
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leons and High is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Leons Furniture i.e., Leons Furniture and High Liner go up and down completely randomly.
Pair Corralation between Leons Furniture and High Liner
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the High Liner. But the stock apears to be less risky and, when comparing its historical volatility, Leons Furniture Limited is 1.36 times less risky than High Liner. The stock trades about -0.11 of its potential returns per unit of risk. The High Liner Foods is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,325 in High Liner Foods on August 24, 2024 and sell it today you would earn a total of 200.00 from holding High Liner Foods or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. High Liner Foods
Performance |
| Timeline |
| Leons Furniture |
| High Liner Foods |
Leons Furniture and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and High Liner
The main advantage of trading using opposite Leons Furniture and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Leons Furniture vs. Restaurant Brands International | Leons Furniture vs. Enghouse Systems | Leons Furniture vs. Metro Inc | Leons Furniture vs. goeasy |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Exco Technologies Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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