Correlation Between Lipocine and Dream Finders

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

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

Diversification Opportunities for Lipocine and Dream Finders

0.05

Correlation Coefficient

Lipocine  Dream Finders

Significant diversification

The 3 months correlation between Lipocine and Dream is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Dream Finders Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Finders Homes and Lipocine 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 Lipocine are associated (or correlated) with Dream Finders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Finders Homes has no effect on the direction of Lipocine i.e., Lipocine and Dream Finders go up and down completely randomly.

Pair Corralation between Lipocine and Dream Finders

Given the investment horizon of 90 days Lipocine is expected to generate 1.41 times more return on investment than Dream Finders. However, Lipocine is 1.41 times more volatile than Dream Finders Homes. It trades about 0.03 of its potential returns per unit of risk. Dream Finders Homes is currently generating about 0.01 per unit of risk. If you would invest  442.00  in Lipocine on October 4, 2024 and sell it today you would earn a total of  46.00  from holding Lipocine or generate 10.41% return on investment over 90 days.

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

Lipocine  vs.  Dream Finders Homes

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dream Finders Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Finders Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Lipocine and Dream Finders

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

The idea behind Lipocine and Dream Finders Homes 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.