Correlation Between Sherborne Investors and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Sherborne Investors and Leggett Platt 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 Sherborne Investors and Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherborne Investors Guernsey and Leggett Platt, you can compare the effects of market volatilities on Sherborne Investors and Leggett Platt 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 Sherborne Investors with a short position of Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherborne Investors and Leggett Platt.
Diversification Opportunities for Sherborne Investors and Leggett Platt
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sherborne and Leggett is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sherborne Investors Guernsey and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt and Sherborne Investors 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 Sherborne Investors Guernsey are associated (or correlated) with Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Sherborne Investors i.e., Sherborne Investors and Leggett Platt go up and down completely randomly.
Pair Corralation between Sherborne Investors and Leggett Platt
Assuming the 90 days trading horizon Sherborne Investors Guernsey is expected to generate 0.25 times more return on investment than Leggett Platt. However, Sherborne Investors Guernsey is 4.05 times less risky than Leggett Platt. It trades about -0.05 of its potential returns per unit of risk. Leggett Platt is currently generating about -0.03 per unit of risk. If you would invest 5,325 in Sherborne Investors Guernsey on September 12, 2024 and sell it today you would lose (50.00) from holding Sherborne Investors Guernsey or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherborne Investors Guernsey vs. Leggett Platt
Performance |
| Timeline |
| Sherborne Investors |
| Leggett Platt |
Sherborne Investors and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherborne Investors and Leggett Platt
The main advantage of trading using opposite Sherborne Investors and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherborne Investors position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Sherborne Investors vs. Endeavour Mining Corp | Sherborne Investors vs. mobilezone holding AG | Sherborne Investors vs. Cairo Communication SpA | Sherborne Investors vs. Naked Wines plc |
| Leggett Platt vs. Melia Hotels | Leggett Platt vs. Indutrade AB | Leggett Platt vs. LPKF Laser Electronics | Leggett Platt vs. Flow Traders NV |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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