Correlation Between Lgm Risk and Rising Us

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

By analyzing existing cross correlation between Lgm Risk Managed and Rising Dollar Profund, you can compare the effects of market volatilities on Lgm Risk and Rising Us 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 Lgm Risk with a short position of Rising Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Rising Us.

Diversification Opportunities for Lgm Risk and Rising Us

0.51

Correlation Coefficient

Lgm Risk  Rising Us

Very weak diversification

The 3 months correlation between Lgm and Rising is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Rising Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of Lgm Risk i.e., Lgm Risk and Rising Us go up and down completely randomly.

Pair Corralation between Lgm Risk and Rising Us

Assuming the 90 days horizon Lgm Risk Managed is expected to under-perform the Rising Us. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lgm Risk Managed is 1.75 times less risky than Rising Us. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Rising Dollar Profund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,108  in Rising Dollar Profund on October 7, 2024 and sell it today you would earn a total of  39.00  from holding Rising Dollar Profund or generate 1.25% return on investment over 90 days.

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

Lgm Risk Managed  vs.  Rising Dollar Profund

Lgm Risk Managed

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lgm Risk Managed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lgm Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rising Dollar Profund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Dollar Profund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rising Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lgm Risk and Rising Us

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

The idea behind Lgm Risk Managed and Rising Dollar Profund 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.