Correlation Between Legend Power and Reitmans
Can any of the company-specific risk be diversified away by investing in both Legend Power and Reitmans 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 Legend Power and Reitmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Power Systems and Reitmans Limited, you can compare the effects of market volatilities on Legend Power and Reitmans 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 Legend Power with a short position of Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Power and Reitmans.
Diversification Opportunities for Legend Power and Reitmans
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legend and Reitmans is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Legend Power Systems and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited and Legend Power 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 Legend Power Systems are associated (or correlated) with Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Legend Power i.e., Legend Power and Reitmans go up and down completely randomly.
Pair Corralation between Legend Power and Reitmans
Assuming the 90 days horizon Legend Power Systems is expected to under-perform the Reitmans. In addition to that, Legend Power is 4.2 times more volatile than Reitmans Limited. It trades about -0.02 of its total potential returns per unit of risk. Reitmans Limited is currently generating about 0.02 per unit of volatility. If you would invest 254.00 in Reitmans Limited on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Reitmans Limited or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Power Systems vs. Reitmans Limited
Performance |
| Timeline |
| Legend Power Systems |
| Reitmans Limited |
Legend Power and Reitmans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Power and Reitmans
The main advantage of trading using opposite Legend Power and Reitmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Power position performs unexpectedly, Reitmans 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 Reitmans will offset losses from the drop in Reitmans' long position.| Legend Power vs. Kraken Robotics | Legend Power vs. Lite Access Technologies | Legend Power vs. DynaCERT | Legend Power vs. Aurora Solar Technologies |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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