Correlation Between Livermore Investments and Life Science

Can any of the company-specific risk be diversified away by investing in both Livermore Investments and Life Science 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 Livermore Investments and Life Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Livermore Investments Group and Life Science REIT, you can compare the effects of market volatilities on Livermore Investments and Life Science 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 Livermore Investments with a short position of Life Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Life Science.

Diversification Opportunities for Livermore Investments and Life Science

-0.25

Correlation Coefficient

Livermore Investments  Life Science

Very good diversification

The 3 months correlation between Livermore and Life is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Life Science REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Science REIT and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with Life Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Science REIT has no effect on the direction of Livermore Investments i.e., Livermore Investments and Life Science go up and down completely randomly.

Pair Corralation between Livermore Investments and Life Science

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 1.29 times more return on investment than Life Science. However, Livermore Investments is 1.29 times more volatile than Life Science REIT. It trades about 0.18 of its potential returns per unit of risk. Life Science REIT is currently generating about 0.01 per unit of risk. If you would invest  2,778  in Livermore Investments Group on October 9, 2024 and sell it today you would earn a total of  2,342  from holding Livermore Investments Group or generate 84.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Livermore Investments Group  vs.  Life Science REIT

Livermore Investments

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Life Science REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Science REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Life Science is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Livermore Investments and Life Science

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

The idea behind Livermore Investments Group and Life Science REIT 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 Transaction History module to view history of all your transactions and understand their impact on performance.