Correlation Between LENSAR and Falcons Beyond

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

By analyzing existing cross correlation between LENSAR Inc and Falcons Beyond Global,, you can compare the effects of market volatilities on LENSAR and Falcons Beyond 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 Falcons Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and Falcons Beyond.

Diversification Opportunities for LENSAR and Falcons Beyond

0.08

Correlation Coefficient

LENSAR  Falcons Beyond

Significant diversification

The 3 months correlation between LENSAR and Falcons is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of LENSAR i.e., LENSAR and Falcons Beyond go up and down completely randomly.

Pair Corralation between LENSAR and Falcons Beyond

Given the investment horizon of 90 days LENSAR is expected to generate 4.95 times less return on investment than Falcons Beyond. But when comparing it to its historical volatility, LENSAR Inc is 4.57 times less risky than Falcons Beyond. It trades about 0.14 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  764.00  in Falcons Beyond Global, on September 16, 2024 and sell it today you would earn a total of  212.00  from holding Falcons Beyond Global, or generate 27.75% return on investment over 90 days.

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

LENSAR Inc  vs.  Falcons Beyond Global,

LENSAR Inc

Risk-Adjusted Performance

17 of 100

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 conflicting basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Falcons Beyond Global,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Falcons Beyond exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LENSAR and Falcons Beyond

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

The idea behind LENSAR Inc and Falcons Beyond Global, 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.