Correlation Between Lake Materials and 311960
Can any of the company-specific risk be diversified away by investing in both Lake Materials and 311960 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 Lake Materials and 311960 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Materials Co and 311960, you can compare the effects of market volatilities on Lake Materials and 311960 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 Lake Materials with a short position of 311960. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and 311960.
Diversification Opportunities for Lake Materials and 311960
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lake and 311960 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and 311960 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 311960 and Lake Materials 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 Lake Materials Co are associated (or correlated) with 311960. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 311960 has no effect on the direction of Lake Materials i.e., Lake Materials and 311960 go up and down completely randomly.
Pair Corralation between Lake Materials and 311960
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 0.91 times more return on investment than 311960. However, Lake Materials Co is 1.1 times less risky than 311960. It trades about 0.09 of its potential returns per unit of risk. 311960 is currently generating about -0.46 per unit of risk. If you would invest 1,187,000 in Lake Materials Co on October 22, 2024 and sell it today you would earn a total of 44,000 from holding Lake Materials Co or generate 3.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.74% |
Values | Daily Returns |
Lake Materials Co vs. 311960
Performance |
Timeline |
Lake Materials |
311960 |
Lake Materials and 311960 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lake Materials and 311960
The main advantage of trading using opposite Lake Materials and 311960 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, 311960 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 311960 will offset losses from the drop in 311960's long position.Lake Materials vs. Clean Science co | Lake Materials vs. TS Investment Corp | Lake Materials vs. DSC Investment | Lake Materials vs. Hanjin Transportation Co |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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