Correlation Between LEGAL GENERAL and Edinburgh Worldwide
Can any of the company-specific risk be diversified away by investing in both LEGAL GENERAL and Edinburgh Worldwide 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 LEGAL GENERAL and Edinburgh Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGAL GENERAL UCITS and Edinburgh Worldwide Investment, you can compare the effects of market volatilities on LEGAL GENERAL and Edinburgh Worldwide 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 LEGAL GENERAL with a short position of Edinburgh Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGAL GENERAL and Edinburgh Worldwide.
Diversification Opportunities for LEGAL GENERAL and Edinburgh Worldwide
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LEGAL and Edinburgh is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LEGAL GENERAL UCITS and Edinburgh Worldwide Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Worldwide and LEGAL GENERAL 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 LEGAL GENERAL UCITS are associated (or correlated) with Edinburgh Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Worldwide has no effect on the direction of LEGAL GENERAL i.e., LEGAL GENERAL and Edinburgh Worldwide go up and down completely randomly.
Pair Corralation between LEGAL GENERAL and Edinburgh Worldwide
Assuming the 90 days trading horizon LEGAL GENERAL is expected to generate 6.37 times less return on investment than Edinburgh Worldwide. But when comparing it to its historical volatility, LEGAL GENERAL UCITS is 1.42 times less risky than Edinburgh Worldwide. It trades about 0.1 of its potential returns per unit of risk. Edinburgh Worldwide Investment is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 17,160 in Edinburgh Worldwide Investment on September 13, 2024 and sell it today you would earn a total of 1,880 from holding Edinburgh Worldwide Investment or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LEGAL GENERAL UCITS vs. Edinburgh Worldwide Investment
Performance |
| Timeline |
| LEGAL GENERAL UCITS |
| Edinburgh Worldwide |
LEGAL GENERAL and Edinburgh Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGAL GENERAL and Edinburgh Worldwide
The main advantage of trading using opposite LEGAL GENERAL and Edinburgh Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGAL GENERAL position performs unexpectedly, Edinburgh Worldwide 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 Edinburgh Worldwide will offset losses from the drop in Edinburgh Worldwide's long position.| LEGAL GENERAL vs. Edinburgh Worldwide Investment | LEGAL GENERAL vs. BlackRock Latin American | LEGAL GENERAL vs. Coor Service Management | LEGAL GENERAL vs. Franklin FTSE Brazil |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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