Correlation Between Dream Finders and Lipocine

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

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

Diversification Opportunities for Dream Finders and Lipocine

0.05

Correlation Coefficient

Dream Finders  Lipocine

Significant diversification

The 3 months correlation between Dream and Lipocine is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dream Finders Homes and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Dream Finders 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 Dream Finders Homes are associated (or correlated) with Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Dream Finders i.e., Dream Finders and Lipocine go up and down completely randomly.

Pair Corralation between Dream Finders and Lipocine

Considering the 90-day investment horizon Dream Finders is expected to generate 3.63 times less return on investment than Lipocine. But when comparing it to its historical volatility, Dream Finders Homes is 1.41 times less risky than Lipocine. It trades about 0.01 of its potential returns per unit of risk. Lipocine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  442.00  in Lipocine on October 4, 2024 and sell it today you would earn a total of  46.00  from holding Lipocine or generate 10.41% return on investment over 90 days.

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

Dream Finders Homes  vs.  Lipocine

Dream Finders Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Finders Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dream Finders and Lipocine

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

The idea behind Dream Finders Homes and Lipocine 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 Stocks Directory module to find actively traded stocks across global markets.