Correlation Between Lennox International and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Lennox International and Ramsay Health 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 Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and Ramsay Health Care, you can compare the effects of market volatilities on Lennox International and Ramsay Health 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 Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and Ramsay Health.
Diversification Opportunities for Lennox International and Ramsay Health
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lennox and Ramsay is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care 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 Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of Lennox International i.e., Lennox International and Ramsay Health go up and down completely randomly.
Pair Corralation between Lennox International and Ramsay Health
Assuming the 90 days horizon Lennox International is expected to generate 1.39 times more return on investment than Ramsay Health. However, Lennox International is 1.39 times more volatile than Ramsay Health Care. It trades about 0.15 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.02 per unit of risk. If you would invest 50,832 in Lennox International on September 12, 2024 and sell it today you would earn a total of 10,188 from holding Lennox International or generate 20.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Lennox International vs. Ramsay Health Care
Performance |
| Timeline |
| Lennox International |
| Ramsay Health Care |
Lennox International and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and Ramsay Health
The main advantage of trading using opposite Lennox International and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.| Lennox International vs. Ramsay Health Care | Lennox International vs. SHIP HEALTHCARE HLDGINC | Lennox International vs. ATRYS HEALTH SA | Lennox International vs. Science Applications International |
| Ramsay Health vs. Universal Health Services | Ramsay Health vs. Superior Plus Corp | Ramsay Health vs. SIVERS SEMICONDUCTORS AB | Ramsay Health vs. NorAm Drilling AS |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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