Correlation Between Louisiana Pacific and Caesarstone
Can any of the company-specific risk be diversified away by investing in both Louisiana Pacific and Caesarstone 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 Louisiana Pacific and Caesarstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisiana Pacific and Caesarstone, you can compare the effects of market volatilities on Louisiana Pacific and Caesarstone 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 Louisiana Pacific with a short position of Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisiana Pacific and Caesarstone.
Diversification Opportunities for Louisiana Pacific and Caesarstone
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Louisiana and Caesarstone is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Louisiana Pacific and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Louisiana Pacific 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 Louisiana Pacific are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Louisiana Pacific i.e., Louisiana Pacific and Caesarstone go up and down completely randomly.
Pair Corralation between Louisiana Pacific and Caesarstone
Considering the 90-day investment horizon Louisiana Pacific is expected to generate 0.64 times more return on investment than Caesarstone. However, Louisiana Pacific is 1.56 times less risky than Caesarstone. It trades about 0.14 of its potential returns per unit of risk. Caesarstone is currently generating about -0.04 per unit of risk. If you would invest 10,695 in Louisiana Pacific on August 28, 2024 and sell it today you would earn a total of 1,327 from holding Louisiana Pacific or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisiana Pacific vs. Caesarstone
Performance |
| Timeline |
| Louisiana Pacific |
| Caesarstone |
Louisiana Pacific and Caesarstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisiana Pacific and Caesarstone
The main advantage of trading using opposite Louisiana Pacific and Caesarstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisiana Pacific position performs unexpectedly, Caesarstone 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 Caesarstone will offset losses from the drop in Caesarstone's long position.| Louisiana Pacific vs. Lennox International | Louisiana Pacific vs. Fortune Brands Innovations | Louisiana Pacific vs. Trane Technologies plc | Louisiana Pacific vs. Johnson Controls International |
| Caesarstone vs. Gibraltar Industries | Caesarstone vs. Quanex Building Products | Caesarstone vs. Jeld Wen Holding | Caesarstone vs. Perma Pipe International Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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