Correlation Between Leons Furniture and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Verizon Communications 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 Verizon Communications 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 Verizon Communications CDR, you can compare the effects of market volatilities on Leons Furniture and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Verizon Communications.
Diversification Opportunities for Leons Furniture and Verizon Communications
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leons and Verizon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Leons Furniture i.e., Leons Furniture and Verizon Communications go up and down completely randomly.
Pair Corralation between Leons Furniture and Verizon Communications
Assuming the 90 days trading horizon Leons Furniture is expected to generate 4.54 times less return on investment than Verizon Communications. In addition to that, Leons Furniture is 1.2 times more volatile than Verizon Communications CDR. It trades about 0.04 of its total potential returns per unit of risk. Verizon Communications CDR is currently generating about 0.24 per unit of volatility. If you would invest 1,848 in Verizon Communications CDR on September 1, 2024 and sell it today you would earn a total of 106.00 from holding Verizon Communications CDR or generate 5.74% 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. Verizon Communications CDR
Performance |
| Timeline |
| Leons Furniture |
| Verizon Communications |
Leons Furniture and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Verizon Communications
The main advantage of trading using opposite Leons Furniture and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| Verizon Communications vs. Apple Inc CDR | Verizon Communications vs. NVIDIA CDR | Verizon Communications vs. Microsoft Corp CDR | Verizon Communications vs. Amazon CDR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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