Correlation Between Leggett Platt and GFL ENVIRONM(SUBVTSH

Can any of the company-specific risk be diversified away by investing in both Leggett Platt and GFL ENVIRONM(SUBVTSH 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 Leggett Platt and GFL ENVIRONM(SUBVTSH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leggett Platt Incorporated and GFL ENVIRONM, you can compare the effects of market volatilities on Leggett Platt and GFL ENVIRONM(SUBVTSH 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 Leggett Platt with a short position of GFL ENVIRONM(SUBVTSH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and GFL ENVIRONM(SUBVTSH.

Diversification Opportunities for Leggett Platt and GFL ENVIRONM(SUBVTSH

-0.26

Correlation Coefficient

Leggett Platt  GFL ENVIRONM(SUBVTSH

Very good diversification

The 3 months correlation between Leggett and GFL is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM(SUBVTSH and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with GFL ENVIRONM(SUBVTSH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM(SUBVTSH has no effect on the direction of Leggett Platt i.e., Leggett Platt and GFL ENVIRONM(SUBVTSH go up and down completely randomly.

Pair Corralation between Leggett Platt and GFL ENVIRONM(SUBVTSH

Assuming the 90 days horizon Leggett Platt Incorporated is expected to under-perform the GFL ENVIRONM(SUBVTSH. In addition to that, Leggett Platt is 1.88 times more volatile than GFL ENVIRONM. It trades about -0.14 of its total potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.13 per unit of volatility. If you would invest  4,000  in GFL ENVIRONM on December 27, 2024 and sell it today you would earn a total of  420.00  from holding GFL ENVIRONM or generate 10.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Leggett Platt Incorporated  vs.  GFL ENVIRONM

Leggett Platt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leggett Platt Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GFL ENVIRONM(SUBVTSH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GFL ENVIRONM(SUBVTSH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Leggett Platt and GFL ENVIRONM(SUBVTSH

The main advantage of trading using opposite Leggett Platt and GFL ENVIRONM(SUBVTSH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, GFL ENVIRONM(SUBVTSH 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 GFL ENVIRONM(SUBVTSH will offset losses from the drop in GFL ENVIRONM(SUBVTSH's long position.

The idea behind Leggett Platt Incorporated and GFL ENVIRONM 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.