Correlation Between Lindsay and Arts Way

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

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

Diversification Opportunities for Lindsay and Arts Way

-0.07

Correlation Coefficient

Lindsay  Arts Way

Good diversification

The 3 months correlation between Lindsay and Arts is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and Lindsay 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 Lindsay are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of Lindsay i.e., Lindsay and Arts Way go up and down completely randomly.

Pair Corralation between Lindsay and Arts Way

Considering the 90-day investment horizon Lindsay is expected to generate 1.04 times more return on investment than Arts Way. However, Lindsay is 1.04 times more volatile than Arts Way Manufacturing Co. It trades about 0.09 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about -0.1 per unit of risk. If you would invest  11,877  in Lindsay on August 31, 2024 and sell it today you would earn a total of  1,285  from holding Lindsay or generate 10.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Lindsay  vs.  Arts Way Manufacturing Co

Lindsay

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Arts Way Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lindsay and Arts Way

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

The idea behind Lindsay and Arts Way Manufacturing Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.