Correlation Between Retail Estates and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Lowes Companies, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Lowes Companies.
Diversification Opportunities for Retail Estates and Lowes Companies
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and Lowes is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Lowes Companies go up and down completely randomly.
Pair Corralation between Retail Estates and Lowes Companies
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Lowes Companies. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.86 times less risky than Lowes Companies. The stock trades about -0.18 of its potential returns per unit of risk. The Lowes Companies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 24,200 in Lowes Companies on September 4, 2024 and sell it today you would earn a total of 1,755 from holding Lowes Companies or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Retail Estates NV vs. Lowes Companies
Performance |
| Timeline |
| Retail Estates NV |
| Lowes Companies |
Retail Estates and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Lowes Companies
The main advantage of trading using opposite Retail Estates and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. FRACTAL GAMING GROUP | Retail Estates vs. TROPHY GAMES DEV | Retail Estates vs. FEMALE HEALTH | Retail Estates vs. GAMESTOP |
| Lowes Companies vs. AOI Electronics Co | Lowes Companies vs. Liberty Broadband | Lowes Companies vs. STORE ELECTRONIC | Lowes Companies vs. Gaztransport Technigaz SA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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