Correlation Between Leons Furniture and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Nicola Mining 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 Nicola Mining 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 Nicola Mining, you can compare the effects of market volatilities on Leons Furniture and Nicola Mining 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Nicola Mining.
Diversification Opportunities for Leons Furniture and Nicola Mining
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leons and Nicola is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Leons Furniture i.e., Leons Furniture and Nicola Mining go up and down completely randomly.
Pair Corralation between Leons Furniture and Nicola Mining
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 0.41 times more return on investment than Nicola Mining. However, Leons Furniture Limited is 2.41 times less risky than Nicola Mining. It trades about -0.02 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.19 per unit of risk. If you would invest 2,685 in Leons Furniture Limited on August 31, 2024 and sell it today you would lose (19.00) from holding Leons Furniture Limited or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Nicola Mining
Performance |
| Timeline |
| Leons Furniture |
| Nicola Mining |
Leons Furniture and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Nicola Mining
The main advantage of trading using opposite Leons Furniture and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Leons Furniture vs. Berkshire Hathaway CDR | Leons Furniture vs. JPMorgan Chase Co | Leons Furniture vs. Bank of America | Leons Furniture vs. Alphabet Inc CDR |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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