Correlation Between Partner and Lesico
Can any of the company-specific risk be diversified away by investing in both Partner and Lesico 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 Partner and Lesico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Partner and Lesico, you can compare the effects of market volatilities on Partner and Lesico 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 Partner with a short position of Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Partner and Lesico.
Diversification Opportunities for Partner and Lesico
Almost no diversification
The 3 months correlation between Partner and Lesico is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Partner and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico and Partner 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 Partner are associated (or correlated) with Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Partner i.e., Partner and Lesico go up and down completely randomly.
Pair Corralation between Partner and Lesico
Assuming the 90 days trading horizon Partner is expected to under-perform the Lesico. But the stock apears to be less risky and, when comparing its historical volatility, Partner is 1.45 times less risky than Lesico. The stock trades about -0.03 of its potential returns per unit of risk. The Lesico is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 40,320 in Lesico on November 10, 2024 and sell it today you would earn a total of 180.00 from holding Lesico or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Partner vs. Lesico
Performance |
| Timeline |
| Partner |
| Lesico |
Partner and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Partner and Lesico
The main advantage of trading using opposite Partner and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Partner position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.| Partner vs. Cellcom Israel | Partner vs. Bezeq Israeli Telecommunication | Partner vs. Bank Hapoalim | Partner vs. Elbit Systems |
| Lesico vs. Batm Advanced Communications | Lesico vs. Veridis Environment | Lesico vs. WhiteSmoke Software | Lesico vs. Rapac Communication Infrastructure |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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