Correlation Between Supermarket Income and LSL Property
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and LSL Property 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 Supermarket Income and LSL Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and LSL Property Services, you can compare the effects of market volatilities on Supermarket Income and LSL Property 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 Supermarket Income with a short position of LSL Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and LSL Property.
Diversification Opportunities for Supermarket Income and LSL Property
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Supermarket and LSL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and LSL Property Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSL Property Services and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with LSL Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSL Property Services has no effect on the direction of Supermarket Income i.e., Supermarket Income and LSL Property go up and down completely randomly.
Pair Corralation between Supermarket Income and LSL Property
Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the LSL Property. But the stock apears to be less risky and, when comparing its historical volatility, Supermarket Income REIT is 1.45 times less risky than LSL Property. The stock trades about -0.02 of its potential returns per unit of risk. The LSL Property Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21,557 in LSL Property Services on August 26, 2024 and sell it today you would earn a total of 6,443 from holding LSL Property Services or generate 29.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. LSL Property Services
Performance |
| Timeline |
| Supermarket Income REIT |
| LSL Property Services |
Supermarket Income and LSL Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and LSL Property
The main advantage of trading using opposite Supermarket Income and LSL Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, LSL Property 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 LSL Property will offset losses from the drop in LSL Property's long position.| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Hammerson PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Diversified Energy |
| LSL Property vs. MoneysupermarketCom Group PLC | LSL Property vs. Dalata Hotel Group | LSL Property vs. Taiwan Semiconductor Manufacturing | LSL Property vs. Zurich Insurance 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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