Correlation Between LPKF Laser and Schroders Investment
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Schroders Investment 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 LPKF Laser and Schroders Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Schroders Investment Trusts, you can compare the effects of market volatilities on LPKF Laser and Schroders Investment 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 LPKF Laser with a short position of Schroders Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Schroders Investment.
Diversification Opportunities for LPKF Laser and Schroders Investment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LPKF and Schroders is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Schroders Investment Trusts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroders Investment and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with Schroders Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroders Investment has no effect on the direction of LPKF Laser i.e., LPKF Laser and Schroders Investment go up and down completely randomly.
Pair Corralation between LPKF Laser and Schroders Investment
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Schroders Investment. In addition to that, LPKF Laser is 2.47 times more volatile than Schroders Investment Trusts. It trades about -0.09 of its total potential returns per unit of risk. Schroders Investment Trusts is currently generating about -0.05 per unit of volatility. If you would invest 47,800 in Schroders Investment Trusts on December 30, 2024 and sell it today you would lose (1,300) from holding Schroders Investment Trusts or give up 2.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LPKF Laser Electronics vs. Schroders Investment Trusts
Performance |
Timeline |
LPKF Laser Electronics |
Schroders Investment |
LPKF Laser and Schroders Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LPKF Laser and Schroders Investment
The main advantage of trading using opposite LPKF Laser and Schroders Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Schroders Investment 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 Schroders Investment will offset losses from the drop in Schroders Investment's long position.LPKF Laser vs. New Residential Investment | LPKF Laser vs. Jade Road Investments | LPKF Laser vs. Tavistock Investments Plc | LPKF Laser vs. Gear4music Plc |
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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.
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