Correlation Between Intuit and Lesico
Can any of the company-specific risk be diversified away by investing in both Intuit and Lesico 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 Intuit and Lesico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuit Inc and Lesico, you can compare the effects of market volatilities on Intuit and Lesico 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 Intuit with a short position of Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and Lesico.
Diversification Opportunities for Intuit and Lesico
Good diversification
The 3 months correlation between Intuit and Lesico is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico and Intuit 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 Intuit Inc are associated (or correlated) with Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Intuit i.e., Intuit and Lesico go up and down completely randomly.
Pair Corralation between Intuit and Lesico
Given the investment horizon of 90 days Intuit is expected to generate 1.17 times less return on investment than Lesico. But when comparing it to its historical volatility, Intuit Inc is 1.49 times less risky than Lesico. It trades about 0.1 of its potential returns per unit of risk. Lesico is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,802 in Lesico on January 24, 2024 and sell it today you would earn a total of 10,408 from holding Lesico or generate 45.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.62% |
| Values | Daily Returns |
Intuit Inc vs. Lesico
Performance |
| Timeline |
| Intuit Inc |
| Lesico |
Intuit and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuit and Lesico
The main advantage of trading using opposite Intuit and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.The idea behind Intuit Inc and Lesico 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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