Correlation Between Lerøy Seafood and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood and Microchip Technology 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 Lerøy Seafood and Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and Microchip Technology Incorporated, you can compare the effects of market volatilities on Lerøy Seafood and Microchip Technology 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 Lerøy Seafood with a short position of Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and Microchip Technology.
Diversification Opportunities for Lerøy Seafood and Microchip Technology
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lerøy and Microchip is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and Lerøy Seafood 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 Lery Seafood Group are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Lerøy Seafood i.e., Lerøy Seafood and Microchip Technology go up and down completely randomly.
Pair Corralation between Lerøy Seafood and Microchip Technology
Assuming the 90 days horizon Lery Seafood Group is expected to generate 0.49 times more return on investment than Microchip Technology. However, Lery Seafood Group is 2.06 times less risky than Microchip Technology. It trades about -0.29 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about -0.26 per unit of risk. If you would invest 446.00 in Lery Seafood Group on September 24, 2024 and sell it today you would lose (42.00) from holding Lery Seafood Group or give up 9.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lery Seafood Group vs. Microchip Technology Incorpora
Performance |
| Timeline |
| Lery Seafood Group |
| Microchip Technology |
Lerøy Seafood and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lerøy Seafood and Microchip Technology
The main advantage of trading using opposite Lerøy Seafood and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Lerøy Seafood vs. Mowi ASA | Lerøy Seafood vs. LEROY SEAFOOD GRUNSPADR | Lerøy Seafood vs. Lery Seafood Group | Lerøy Seafood vs. Nisshin Seifun Group |
| Microchip Technology vs. Astral Foods Limited | Microchip Technology vs. Ribbon Communications | Microchip Technology vs. Entravision Communications | Microchip Technology vs. Lery Seafood 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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