Correlation Between LG Electronics and Marie Brizard

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

By analyzing existing cross correlation between LG Electronics and Marie Brizard Wine, you can compare the effects of market volatilities on LG Electronics and Marie Brizard 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 Electronics with a short position of Marie Brizard. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Marie Brizard.

Diversification Opportunities for LG Electronics and Marie Brizard

-0.32

Correlation Coefficient

LG Electronics  Marie Brizard

Very good diversification

The 3 months correlation between LGLG and Marie is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Marie Brizard Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marie Brizard Wine and LG Electronics 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 Electronics are associated (or correlated) with Marie Brizard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marie Brizard Wine has no effect on the direction of LG Electronics i.e., LG Electronics and Marie Brizard go up and down completely randomly.

Pair Corralation between LG Electronics and Marie Brizard

Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Marie Brizard. In addition to that, LG Electronics is 1.49 times more volatile than Marie Brizard Wine. It trades about -0.03 of its total potential returns per unit of risk. Marie Brizard Wine is currently generating about 0.04 per unit of volatility. If you would invest  347.00  in Marie Brizard Wine on September 29, 2024 and sell it today you would earn a total of  28.00  from holding Marie Brizard Wine or generate 8.07% return on investment over 90 days.

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

LG Electronics  vs.  Marie Brizard Wine

LG Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Marie Brizard Wine

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Marie Brizard Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marie Brizard is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LG Electronics and Marie Brizard

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

The idea behind LG Electronics and Marie Brizard Wine 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.