Correlation Between Lighting Science and Espey Mfg

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

By analyzing existing cross correlation between Lighting Science Group and Espey Mfg Electronics, you can compare the effects of market volatilities on Lighting Science and Espey Mfg 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 Lighting Science with a short position of Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lighting Science and Espey Mfg.

Diversification Opportunities for Lighting Science and Espey Mfg

0.0

Correlation Coefficient

Lighting Science  Espey Mfg

Pay attention - limited upside

The 3 months correlation between Lighting and Espey is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lighting Science Group and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics and Lighting Science 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 Lighting Science Group are associated (or correlated) with Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Lighting Science i.e., Lighting Science and Espey Mfg go up and down completely randomly.

Pair Corralation between Lighting Science and Espey Mfg

If you would invest (100.00) in Lighting Science Group on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Lighting Science Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lighting Science Group  vs.  Espey Mfg Electronics

Lighting Science

Risk-Adjusted Performance

Very Weak

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

Espey Mfg Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Espey Mfg Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic 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 Lighting Science and Espey Mfg

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

The idea behind Lighting Science Group and Espey Mfg Electronics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.