Correlation Between Leons Furniture and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both Leons Furniture and Westshore Terminals 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 Westshore Terminals 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 Westshore Terminals Investment, you can compare the effects of market volatilities on Leons Furniture and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Westshore Terminals.
Diversification Opportunities for Leons Furniture and Westshore Terminals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leons and Westshore is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Leons Furniture i.e., Leons Furniture and Westshore Terminals go up and down completely randomly.
Pair Corralation between Leons Furniture and Westshore Terminals
Assuming the 90 days trading horizon Leons Furniture Limited is expected to generate 1.79 times more return on investment than Westshore Terminals. However, Leons Furniture is 1.79 times more volatile than Westshore Terminals Investment. It trades about 0.1 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.08 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Westshore Terminals Investment
Performance |
| Timeline |
| Leons Furniture |
| Westshore Terminals |
Leons Furniture and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Westshore Terminals
The main advantage of trading using opposite Leons Furniture and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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