Correlation Between Loomis AB and Resideo Technologies
Can any of the company-specific risk be diversified away by investing in both Loomis AB and Resideo Technologies 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 Loomis AB and Resideo Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loomis AB and Resideo Technologies, you can compare the effects of market volatilities on Loomis AB and Resideo Technologies 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 Loomis AB with a short position of Resideo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loomis AB and Resideo Technologies.
Diversification Opportunities for Loomis AB and Resideo Technologies
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Loomis and Resideo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Loomis AB and Resideo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resideo Technologies and Loomis AB 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 Loomis AB are associated (or correlated) with Resideo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resideo Technologies has no effect on the direction of Loomis AB i.e., Loomis AB and Resideo Technologies go up and down completely randomly.
Pair Corralation between Loomis AB and Resideo Technologies
Assuming the 90 days horizon Loomis AB is expected to generate 1.22 times more return on investment than Resideo Technologies. However, Loomis AB is 1.22 times more volatile than Resideo Technologies. It trades about 0.23 of its potential returns per unit of risk. Resideo Technologies is currently generating about -0.64 per unit of risk. If you would invest 2,995 in Loomis AB on October 9, 2024 and sell it today you would earn a total of 203.00 from holding Loomis AB or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Loomis AB vs. Resideo Technologies
Performance |
| Timeline |
| Loomis AB |
| Resideo Technologies |
Loomis AB and Resideo Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loomis AB and Resideo Technologies
The main advantage of trading using opposite Loomis AB and Resideo Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loomis AB position performs unexpectedly, Resideo Technologies 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 Resideo Technologies will offset losses from the drop in Resideo Technologies' long position.| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
| Resideo Technologies vs. Allegion PLC | Resideo Technologies vs. MSA Safety | Resideo Technologies vs. NL Industries | Resideo Technologies vs. Brady |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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