Correlation Between SECURITAS and Loews Corp

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

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

Diversification Opportunities for SECURITAS and Loews Corp

0.87

Correlation Coefficient

SECURITAS  Loews Corp

Very poor diversification

The 3 months correlation between SECURITAS and Loews is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and SECURITAS 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 SECURITAS B are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of SECURITAS i.e., SECURITAS and Loews Corp go up and down completely randomly.

Pair Corralation between SECURITAS and Loews Corp

Assuming the 90 days trading horizon SECURITAS B is expected to under-perform the Loews Corp. But the stock apears to be less risky and, when comparing its historical volatility, SECURITAS B is 2.33 times less risky than Loews Corp. The stock trades about -0.05 of its potential returns per unit of risk. The Loews Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,950  in Loews Corp on October 22, 2024 and sell it today you would earn a total of  350.00  from holding Loews Corp or generate 4.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.12%
Values	Daily Returns

SECURITAS B   vs.  Loews Corp

SECURITAS B

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Loews Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SECURITAS and Loews Corp

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

The idea behind SECURITAS B and Loews Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.