Correlation Between LandBridge Company and Essilor International

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

By analyzing existing cross correlation between LandBridge Company LLC and Essilor International SA, you can compare the effects of market volatilities on LandBridge Company and Essilor International 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 LandBridge Company with a short position of Essilor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LandBridge Company and Essilor International.

Diversification Opportunities for LandBridge Company and Essilor International

0.74

Correlation Coefficient

LandBridge Company  Essilor International

Poor diversification

The 3 months correlation between LandBridge and Essilor is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LandBridge Company LLC and Essilor International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essilor International and LandBridge Company 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 LandBridge Company LLC are associated (or correlated) with Essilor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essilor International has no effect on the direction of LandBridge Company i.e., LandBridge Company and Essilor International go up and down completely randomly.

Pair Corralation between LandBridge Company and Essilor International

Allowing for the 90-day total investment horizon LandBridge Company LLC is expected to generate 5.77 times more return on investment than Essilor International. However, LandBridge Company is 5.77 times more volatile than Essilor International SA. It trades about 0.09 of its potential returns per unit of risk. Essilor International SA is currently generating about -0.05 per unit of risk. If you would invest  6,145  in LandBridge Company LLC on October 7, 2024 and sell it today you would earn a total of  855.00  from holding LandBridge Company LLC or generate 13.91% return on investment over 90 days.

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

LandBridge Company LLC  vs.  Essilor International SA

LandBridge Company

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LandBridge Company LLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, LandBridge Company sustained solid returns over the last few months and may actually be approaching a breakup point.

Essilor International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Essilor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LandBridge Company and Essilor International

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

The idea behind LandBridge Company LLC and Essilor International SA 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.