Correlation Between LQR House and Pool

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

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

Diversification Opportunities for LQR House and Pool

-0.24

Correlation Coefficient

LQR House  Pool

Very good diversification

The 3 months correlation between LQR and Pool is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding LQR House Common and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool and LQR House 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 LQR House Common are associated (or correlated) with Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of LQR House i.e., LQR House and Pool go up and down completely randomly.

Pair Corralation between LQR House and Pool

Considering the 90-day investment horizon LQR House Common is expected to generate 8.68 times more return on investment than Pool. However, LQR House is 8.68 times more volatile than Pool Corporation. It trades about 0.17 of its potential returns per unit of risk. Pool Corporation is currently generating about -0.47 per unit of risk. If you would invest  109.00  in LQR House Common on October 9, 2024 and sell it today you would earn a total of  25.00  from holding LQR House Common or generate 22.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

LQR House Common  vs.  Pool Corp.

LQR House Common

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days LQR House Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Pool

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with LQR House and Pool

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

The idea behind LQR House Common and Pool Corporation 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.