Correlation Between Lemonade and Guerrilla

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

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

Diversification Opportunities for Lemonade and Guerrilla

-0.87

Correlation Coefficient

Lemonade  Guerrilla

Pay attention - limited upside

The 3 months correlation between Lemonade and Guerrilla is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF and Lemonade 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 Lemonade are associated (or correlated) with Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Lemonade i.e., Lemonade and Guerrilla go up and down completely randomly.

Pair Corralation between Lemonade and Guerrilla

Given the investment horizon of 90 days Lemonade is expected to under-perform the Guerrilla. But the stock apears to be less risky and, when comparing its historical volatility, Lemonade is 3.33 times less risky than Guerrilla. The stock trades about -0.22 of its potential returns per unit of risk. The Guerrilla RF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Guerrilla RF on October 22, 2024 and sell it today you would lose (9.00) from holding Guerrilla RF or give up 6.21% of portfolio value over 90 days.

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

Lemonade  vs.  Guerrilla RF

Lemonade

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lemonade are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lemonade exhibited solid returns over the last few months and may actually be approaching a breakup point.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lemonade and Guerrilla

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

The idea behind Lemonade and Guerrilla RF 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.