Correlation Between LG Cyber and Vanguard FTSE

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

By analyzing existing cross correlation between LG Cyber Security and Vanguard FTSE Emerging, you can compare the effects of market volatilities on LG Cyber and Vanguard FTSE 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 LG Cyber with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Cyber and Vanguard FTSE.

Diversification Opportunities for LG Cyber and Vanguard FTSE

-0.03

Correlation Coefficient

LG Cyber  Vanguard FTSE

Good diversification

The 3 months correlation between ISPY and Vanguard is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding LG Cyber Security and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Emerging and LG Cyber 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 LG Cyber Security are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of LG Cyber i.e., LG Cyber and Vanguard FTSE go up and down completely randomly.

Pair Corralation between LG Cyber and Vanguard FTSE

Assuming the 90 days trading horizon LG Cyber Security is expected to generate 1.76 times more return on investment than Vanguard FTSE. However, LG Cyber is 1.76 times more volatile than Vanguard FTSE Emerging. It trades about 0.16 of its potential returns per unit of risk. Vanguard FTSE Emerging is currently generating about -0.01 per unit of risk. If you would invest  2,287  in LG Cyber Security on October 12, 2024 and sell it today you would earn a total of  324.00  from holding LG Cyber Security or generate 14.17% return on investment over 90 days.

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

LG Cyber Security  vs.  Vanguard FTSE Emerging

LG Cyber Security

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LG Cyber Security are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LG Cyber showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard FTSE Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with LG Cyber and Vanguard FTSE

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

The idea behind LG Cyber Security and Vanguard FTSE Emerging 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.