Correlation Between Lowes Companies and Pandora Media

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Can any of the company-specific risk be diversified away by investing in both Lowes Companies and Pandora Media 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 Lowes Companies and Pandora Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and Pandora Media, you can compare the effects of market volatilities on Lowes Companies and Pandora Media 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 Lowes Companies with a short position of Pandora Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Pandora Media.

Diversification Opportunities for Lowes Companies and Pandora Media

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Lowes and Pandora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Pandora Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora Media and Lowes Companies 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 Lowes Companies are associated (or correlated) with Pandora Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora Media has no effect on the direction of Lowes Companies i.e., Lowes Companies and Pandora Media go up and down completely randomly.

Pair Corralation between Lowes Companies and Pandora Media

If you would invest  19,968  in Lowes Companies on January 24, 2024 and sell it today you would earn a total of  3,155  from holding Lowes Companies or generate 15.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Lowes Companies  vs.  Pandora Media

 Performance 
       Timeline  
Lowes Companies 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Lowes Companies may actually be approaching a critical reversion point that can send shares even higher in May 2024.
Pandora Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pandora Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pandora Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Lowes Companies and Pandora Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lowes Companies and Pandora Media

The main advantage of trading using opposite Lowes Companies and Pandora Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, Pandora Media 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 Pandora Media will offset losses from the drop in Pandora Media's long position.
The idea behind Lowes Companies and Pandora Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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