Correlation Between Ralph Lauren and Land Securities

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

By analyzing existing cross correlation between Ralph Lauren Corp and Land Securities Group, you can compare the effects of market volatilities on Ralph Lauren and Land Securities 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 Ralph Lauren with a short position of Land Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ralph Lauren and Land Securities.

Diversification Opportunities for Ralph Lauren and Land Securities

-0.6

Correlation Coefficient

Ralph Lauren  Land Securities

Excellent diversification

The 3 months correlation between Ralph and Land is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Land Securities go up and down completely randomly.

Pair Corralation between Ralph Lauren and Land Securities

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.38 times more return on investment than Land Securities. However, Ralph Lauren Corp is 2.61 times less risky than Land Securities. It trades about 0.23 of its potential returns per unit of risk. Land Securities Group is currently generating about -0.02 per unit of risk. If you would invest  22,732  in Ralph Lauren Corp on October 8, 2024 and sell it today you would earn a total of  1,564  from holding Ralph Lauren Corp or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ralph Lauren Corp  vs.  Land Securities Group

Ralph Lauren Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Land Securities Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ralph Lauren and Land Securities

The main advantage of trading using opposite Ralph Lauren and Land Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren position performs unexpectedly, Land Securities 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 Land Securities will offset losses from the drop in Land Securities' long position.

The idea behind Ralph Lauren Corp and Land Securities Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.