Correlation Between LENSAR and EPR Properties

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

By analyzing existing cross correlation between LENSAR Inc and EPR Properties 5750, you can compare the effects of market volatilities on LENSAR and EPR Properties 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 LENSAR with a short position of EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and EPR Properties.

Diversification Opportunities for LENSAR and EPR Properties

0.31

Correlation Coefficient

LENSAR  EPR Properties

Weak diversification

The 3 months correlation between LENSAR and EPR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and EPR Properties 5750 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 5750 and LENSAR 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 LENSAR Inc are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties 5750 has no effect on the direction of LENSAR i.e., LENSAR and EPR Properties go up and down completely randomly.

Pair Corralation between LENSAR and EPR Properties

Given the investment horizon of 90 days LENSAR Inc is expected to generate 4.71 times more return on investment than EPR Properties. However, LENSAR is 4.71 times more volatile than EPR Properties 5750. It trades about 0.22 of its potential returns per unit of risk. EPR Properties 5750 is currently generating about 0.0 per unit of risk. If you would invest  770.00  in LENSAR Inc on December 20, 2024 and sell it today you would earn a total of  770.00  from holding LENSAR Inc or generate 100.0% return on investment over 90 days.

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

LENSAR Inc  vs.  EPR Properties 5750

LENSAR Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

EPR Properties 5750

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPR Properties 5750 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, EPR Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LENSAR and EPR Properties

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

The idea behind LENSAR Inc and EPR Properties 5750 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.