Correlation Between Lennox International and DISTRICT METALS
Can any of the company-specific risk be diversified away by investing in both Lennox International and DISTRICT METALS 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 Lennox International and DISTRICT METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and DISTRICT METALS, you can compare the effects of market volatilities on Lennox International and DISTRICT METALS 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 Lennox International with a short position of DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and DISTRICT METALS.
Diversification Opportunities for Lennox International and DISTRICT METALS
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lennox and DISTRICT is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS and Lennox International 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 Lennox International are associated (or correlated) with DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of Lennox International i.e., Lennox International and DISTRICT METALS go up and down completely randomly.
Pair Corralation between Lennox International and DISTRICT METALS
Assuming the 90 days horizon Lennox International is expected to generate 2.18 times less return on investment than DISTRICT METALS. But when comparing it to its historical volatility, Lennox International is 2.63 times less risky than DISTRICT METALS. It trades about 0.08 of its potential returns per unit of risk. DISTRICT METALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19.00 in DISTRICT METALS on November 3, 2024 and sell it today you would earn a total of 6.00 from holding DISTRICT METALS or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lennox International vs. DISTRICT METALS
Performance |
| Timeline |
| Lennox International |
| DISTRICT METALS |
Lennox International and DISTRICT METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and DISTRICT METALS
The main advantage of trading using opposite Lennox International and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, DISTRICT METALS 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 DISTRICT METALS will offset losses from the drop in DISTRICT METALS's long position.| Lennox International vs. CARDINAL HEALTH | Lennox International vs. Endeavour Mining PLC | Lennox International vs. De Grey Mining | Lennox International vs. VARIOUS EATERIES LS |
| DISTRICT METALS vs. Rio Tinto Group | DISTRICT METALS vs. Anglo American plc | DISTRICT METALS vs. Mineral Resources Limited | DISTRICT METALS vs. Liontown Resources Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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