Correlation Between Lennox International and Digimarc
Can any of the company-specific risk be diversified away by investing in both Lennox International and Digimarc 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 Lennox International and Digimarc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and Digimarc, you can compare the effects of market volatilities on Lennox International and Digimarc 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 Lennox International with a short position of Digimarc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and Digimarc.
Diversification Opportunities for Lennox International and Digimarc
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lennox and Digimarc is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and Lennox International 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 Lennox International are associated (or correlated) with Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of Lennox International i.e., Lennox International and Digimarc go up and down completely randomly.
Pair Corralation between Lennox International and Digimarc
Considering the 90-day investment horizon Lennox International is expected to generate 1.04 times more return on investment than Digimarc. However, Lennox International is 1.04 times more volatile than Digimarc. It trades about -0.08 of its potential returns per unit of risk. Digimarc is currently generating about -0.58 per unit of risk. If you would invest 48,298 in Lennox International on January 26, 2024 and sell it today you would lose (1,513) from holding Lennox International or give up 3.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lennox International vs. Digimarc
Performance |
Timeline |
Lennox International |
Digimarc |
Lennox International and Digimarc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lennox International and Digimarc
The main advantage of trading using opposite Lennox International and Digimarc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, Digimarc 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 Digimarc will offset losses from the drop in Digimarc's long position.Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International vs. Carlisle Companies Incorporated | Lennox International vs. Fortune Brands Innovations |
Digimarc vs. Infosys Ltd ADR | Digimarc vs. Cognizant Technology Solutions | Digimarc vs. Fidelity National Information | Digimarc vs. Jack Henry Associates |
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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