Correlation Between Lind Capital and Embark Commodity

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

By analyzing existing cross correlation between Lind Capital Partners and Embark Commodity Strategy, you can compare the effects of market volatilities on Lind Capital and Embark Commodity 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 Lind Capital with a short position of Embark Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lind Capital and Embark Commodity.

Diversification Opportunities for Lind Capital and Embark Commodity

0.47

Correlation Coefficient

Lind Capital  Embark Commodity

Very weak diversification

The 3 months correlation between Lind and Embark is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lind Capital Partners and Embark Commodity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Commodity Strategy and Lind Capital 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 Lind Capital Partners are associated (or correlated) with Embark Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Commodity Strategy has no effect on the direction of Lind Capital i.e., Lind Capital and Embark Commodity go up and down completely randomly.

Pair Corralation between Lind Capital and Embark Commodity

Assuming the 90 days horizon Lind Capital Partners is expected to under-perform the Embark Commodity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lind Capital Partners is 2.8 times less risky than Embark Commodity. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Embark Commodity Strategy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,011  in Embark Commodity Strategy on December 28, 2024 and sell it today you would earn a total of  78.00  from holding Embark Commodity Strategy or generate 7.72% return on investment over 90 days.

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

Lind Capital Partners  vs.  Embark Commodity Strategy

Lind Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lind Capital Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Lind Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Embark Commodity Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Commodity Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Embark Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lind Capital and Embark Commodity

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

The idea behind Lind Capital Partners and Embark Commodity Strategy 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.