Correlation Between Playtech Plc and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and Lowes Companies 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 Playtech Plc and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and Lowes Companies, you can compare the effects of market volatilities on Playtech Plc and Lowes Companies 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 Playtech Plc with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Lowes Companies.
Diversification Opportunities for Playtech Plc and Lowes Companies
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playtech and Lowes is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Playtech Plc 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 Playtech plc are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Playtech Plc i.e., Playtech Plc and Lowes Companies go up and down completely randomly.
Pair Corralation between Playtech Plc and Lowes Companies
Assuming the 90 days trading horizon Playtech plc is expected to generate 1.25 times more return on investment than Lowes Companies. However, Playtech Plc is 1.25 times more volatile than Lowes Companies. It trades about 0.05 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.05 per unit of risk. If you would invest 570.00 in Playtech plc on September 13, 2024 and sell it today you would earn a total of 308.00 from holding Playtech plc or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. Lowes Companies
Performance |
| Timeline |
| Playtech plc |
| Lowes Companies |
Playtech Plc and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Lowes Companies
The main advantage of trading using opposite Playtech Plc and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
| Lowes Companies vs. Playtech plc | Lowes Companies vs. Canon Marketing Japan | Lowes Companies vs. VIAPLAY GROUP AB | Lowes Companies vs. Fast Retailing Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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