Correlation Between Lightbridge Corp and NVent Electric

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

By analyzing existing cross correlation between Lightbridge Corp and nVent Electric PLC, you can compare the effects of market volatilities on Lightbridge Corp and NVent Electric 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 NVent Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightbridge Corp and NVent Electric.

Diversification Opportunities for Lightbridge Corp and NVent Electric

-0.44

Correlation Coefficient

Lightbridge Corp  NVent Electric

Very good diversification

The 3 months correlation between Lightbridge and NVent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lightbridge Corp and nVent Electric PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nVent Electric PLC 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 NVent Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nVent Electric PLC has no effect on the direction of Lightbridge Corp i.e., Lightbridge Corp and NVent Electric go up and down completely randomly.

Pair Corralation between Lightbridge Corp and NVent Electric

Given the investment horizon of 90 days Lightbridge Corp is expected to generate 4.62 times more return on investment than NVent Electric. However, Lightbridge Corp is 4.62 times more volatile than nVent Electric PLC. It trades about 0.1 of its potential returns per unit of risk. nVent Electric PLC is currently generating about -0.15 per unit of risk. If you would invest  654.00  in Lightbridge Corp on November 28, 2024 and sell it today you would earn a total of  262.00  from holding Lightbridge Corp or generate 40.06% return on investment over 90 days.

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

Lightbridge Corp  vs.  nVent Electric PLC

Lightbridge Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lightbridge Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Lightbridge Corp reported solid returns over the last few months and may actually be approaching a breakup point.

nVent Electric PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days nVent Electric PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lightbridge Corp and NVent Electric

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

The idea behind Lightbridge Corp and nVent Electric PLC 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 CEOs Directory module to screen CEOs from public companies around the world.