Correlation Between Rite Aid and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Rite Aid and Lowes Companies 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 Rite Aid and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and Lowes Companies, you can compare the effects of market volatilities on Rite Aid and Lowes Companies 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 Rite Aid with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Lowes Companies.
Diversification Opportunities for Rite Aid and Lowes Companies
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rite and Lowes is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Rite Aid 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 Rite Aid are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Rite Aid i.e., Rite Aid and Lowes Companies go up and down completely randomly.
Pair Corralation between Rite Aid and Lowes Companies
Considering the 90-day investment horizon Rite Aid is expected to under-perform the Lowes Companies. In addition to that, Rite Aid is 4.86 times more volatile than Lowes Companies. It trades about -0.05 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.03 per unit of volatility. If you would invest 19,236 in Lowes Companies on January 17, 2024 and sell it today you would earn a total of 3,765 from holding Lowes Companies or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.81% |
| Values | Daily Returns |
Rite Aid vs. Lowes Companies
Performance |
| Timeline |
| Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lowes Companies |
Rite Aid and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rite Aid and Lowes Companies
The main advantage of trading using opposite Rite Aid and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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