Correlation Between LIFECARE and Best Buy

By analyzing existing cross correlation between LIFECARE AS and Best Buy Co, you can compare the effects of market volatilities on LIFECARE and Best Buy 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 LIFECARE with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFECARE and Best Buy.

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Can any of the company-specific risk be diversified away by investing in both LIFECARE and Best Buy 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 LIFECARE and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for LIFECARE and Best Buy

0.7
  Correlation Coefficient
LIFECARE AS
Best Buy

Poor diversification

The 3 months correlation between LIFECARE and Best Buy is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LIFECARE AS and Best Buy Co Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and LIFECARE 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 LIFECARE AS are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of LIFECARE i.e. LIFECARE and Best Buy go up and down completely randomly.

Pair Corralation between LIFECARE and Best Buy

Assuming the 30 trading days horizon, LIFECARE AS is expected to generate 2.46 times more return on investment than Best Buy. However, LIFECARE is 2.46 times more volatile than Best Buy Co. It trades about 0.18 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.12 per unit of risk. If you would invest  280.00  in LIFECARE AS on June 10, 2020 and sell it today you would earn a total of  300.00  from holding LIFECARE AS or generate 107.14% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

LIFECARE AS  vs.  Best Buy Co Inc

 Performance (%) 
      Timeline 
LIFECARE AS 
1212

LIFECARE Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in LIFECARE AS are ranked lower than 12 (%) of all global equities and portfolios over the last 30 days. In spite of rather weak fundamental drivers, LIFECARE exhibited solid returns over the last few months and may actually be approaching a breakup point.
Best Buy 
88

Best Buy Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 8 (%) of all global equities and portfolios over the last 30 days. In spite of fairly abnormal basic indicators, Best Buy showed solid returns over the last few months and may actually be approaching a breakup point.

LIFECARE and Best Buy Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Pattern Recognition module to use different pattern recognition models to time the market across multiple global exchanges.


 
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