Correlation Between Lowes Companies and Target
Can any of the company-specific risk be diversified away by investing in both Lowes Companies and Target 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 Lowes Companies and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and Target, you can compare the effects of market volatilities on Lowes Companies and Target 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 Lowes Companies with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Target.
Diversification Opportunities for Lowes Companies and Target
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lowes and Target is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Lowes Companies 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 Lowes Companies are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Lowes Companies i.e., Lowes Companies and Target go up and down completely randomly.
Pair Corralation between Lowes Companies and Target
Considering the 90-day investment horizon Lowes Companies is expected to generate 0.41 times more return on investment than Target. However, Lowes Companies is 2.41 times less risky than Target. It trades about 0.14 of its potential returns per unit of risk. Target is currently generating about -0.06 per unit of risk. If you would invest 24,442 in Lowes Companies on August 31, 2024 and sell it today you would earn a total of 2,877 from holding Lowes Companies or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowes Companies vs. Target
Performance |
| Timeline |
| Lowes Companies |
| Target |
Lowes Companies and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and Target
The main advantage of trading using opposite Lowes Companies and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Lowes Companies vs. RLJ Lodging Trust | Lowes Companies vs. Aquagold International | Lowes Companies vs. Stepstone Group | Lowes Companies vs. Morningstar Unconstrained Allocation |
| Target vs. Dollar General | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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