Correlation Between Ramsay Health and Lennox International
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Lennox International 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 Ramsay Health and Lennox International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramsay Health Care and Lennox International, you can compare the effects of market volatilities on Ramsay Health and Lennox International 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 Ramsay Health with a short position of Lennox International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Lennox International.
Diversification Opportunities for Ramsay Health and Lennox International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ramsay and Lennox is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Lennox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennox International and Ramsay Health 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 Ramsay Health Care are associated (or correlated) with Lennox International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennox International has no effect on the direction of Ramsay Health i.e., Ramsay Health and Lennox International go up and down completely randomly.
Pair Corralation between Ramsay Health and Lennox International
Assuming the 90 days horizon Ramsay Health Care is expected to under-perform the Lennox International. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Health Care is 1.12 times less risky than Lennox International. The stock trades about -0.01 of its potential returns per unit of risk. The Lennox International is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 57,140 in Lennox International on September 14, 2024 and sell it today you would earn a total of 4,700 from holding Lennox International or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Lennox International
Performance |
| Timeline |
| Ramsay Health Care |
| Lennox International |
Ramsay Health and Lennox International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Lennox International
The main advantage of trading using opposite Ramsay Health and Lennox International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Lennox International 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 Lennox International will offset losses from the drop in Lennox International's long position.| Ramsay Health vs. MGIC INVESTMENT | Ramsay Health vs. EAT WELL INVESTMENT | Ramsay Health vs. Ross Stores | Ramsay Health vs. CDL INVESTMENT |
| Lennox International vs. NISSIN FOODS HLDGS | Lennox International vs. PREMIER FOODS | Lennox International vs. Dalata Hotel Group | Lennox International vs. NH HOTEL GROUP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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