Correlation Between Prodigy Public and Lease IT
Can any of the company-specific risk be diversified away by investing in both Prodigy Public and Lease IT 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 Prodigy Public and Lease IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prodigy Public and Lease IT Public, you can compare the effects of market volatilities on Prodigy Public and Lease IT 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 Prodigy Public with a short position of Lease IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodigy Public and Lease IT.
Diversification Opportunities for Prodigy Public and Lease IT
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Prodigy and Lease is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Prodigy Public and Lease IT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lease IT Public and Prodigy Public 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 Prodigy Public are associated (or correlated) with Lease IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lease IT Public has no effect on the direction of Prodigy Public i.e., Prodigy Public and Lease IT go up and down completely randomly.
Pair Corralation between Prodigy Public and Lease IT
Assuming the 90 days trading horizon Prodigy Public is expected to generate 1.0 times more return on investment than Lease IT. However, Prodigy Public is 1.0 times more volatile than Lease IT Public. It trades about 0.04 of its potential returns per unit of risk. Lease IT Public is currently generating about 0.04 per unit of risk. If you would invest 322.00 in Prodigy Public on September 14, 2024 and sell it today you would lose (52.00) from holding Prodigy Public or give up 16.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.38% |
| Values | Daily Returns |
Prodigy Public vs. Lease IT Public
Performance |
| Timeline |
| Prodigy Public |
| Lease IT Public |
Prodigy Public and Lease IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prodigy Public and Lease IT
The main advantage of trading using opposite Prodigy Public and Lease IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prodigy Public position performs unexpectedly, Lease IT 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 Lease IT will offset losses from the drop in Lease IT's long position.| Prodigy Public vs. East Coast Furnitech | Prodigy Public vs. President Automobile Industries | Prodigy Public vs. Siamgas and Petrochemicals | Prodigy Public vs. RB Food Supply |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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