Correlation Between Lightbridge Corp and Enersys

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

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

Diversification Opportunities for Lightbridge Corp and Enersys

0.36

Correlation Coefficient

Lightbridge Corp  Enersys

Weak diversification

The 3 months correlation between Lightbridge and Enersys is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lightbridge Corp and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Lightbridge Corp 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 Lightbridge Corp are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Lightbridge Corp i.e., Lightbridge Corp and Enersys go up and down completely randomly.

Pair Corralation between Lightbridge Corp and Enersys

Given the investment horizon of 90 days Lightbridge Corp is expected to generate 3.54 times more return on investment than Enersys. However, Lightbridge Corp is 3.54 times more volatile than Enersys. It trades about 0.04 of its potential returns per unit of risk. Enersys is currently generating about 0.03 per unit of risk. If you would invest  419.00  in Lightbridge Corp on October 21, 2024 and sell it today you would earn a total of  150.00  from holding Lightbridge Corp or generate 35.8% return on investment over 90 days.

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

Lightbridge Corp  vs.  Enersys

Lightbridge Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lightbridge Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lightbridge Corp and Enersys

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

The idea behind Lightbridge Corp and Enersys 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.