Correlation Between Stone Harbor and Lmp Capital

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

By analyzing existing cross correlation between Stone Harbor Emerging and Lmp Capital And, you can compare the effects of market volatilities on Stone Harbor and Lmp Capital 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 Stone Harbor with a short position of Lmp Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Lmp Capital.

Diversification Opportunities for Stone Harbor and Lmp Capital

-0.09

Correlation Coefficient

Stone Harbor  Lmp Capital

Good diversification

The 3 months correlation between Stone and Lmp is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and Lmp Capital And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lmp Capital And and Stone Harbor 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 Stone Harbor Emerging are associated (or correlated) with Lmp Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lmp Capital And has no effect on the direction of Stone Harbor i.e., Stone Harbor and Lmp Capital go up and down completely randomly.

Pair Corralation between Stone Harbor and Lmp Capital

Considering the 90-day investment horizon Stone Harbor Emerging is expected to generate 1.11 times more return on investment than Lmp Capital. However, Stone Harbor is 1.11 times more volatile than Lmp Capital And. It trades about 0.22 of its potential returns per unit of risk. Lmp Capital And is currently generating about 0.01 per unit of risk. If you would invest  446.00  in Stone Harbor Emerging on December 19, 2024 and sell it today you would earn a total of  70.00  from holding Stone Harbor Emerging or generate 15.7% return on investment over 90 days.

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

Stone Harbor Emerging  vs.  Lmp Capital And

Stone Harbor Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Harbor Emerging are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Stone Harbor reported solid returns over the last few months and may actually be approaching a breakup point.

Lmp Capital And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lmp Capital And has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, Lmp Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Stone Harbor and Lmp Capital

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

The idea behind Stone Harbor Emerging and Lmp Capital And 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.