Correlation Between Lumia and REX FANG
Can any of the company-specific risk be diversified away by investing in both Lumia and REX FANG 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 Lumia and REX FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and REX FANG Innovation, you can compare the effects of market volatilities on Lumia and REX FANG 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 Lumia with a short position of REX FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and REX FANG.
Diversification Opportunities for Lumia and REX FANG
Very weak diversification
The 3 months correlation between Lumia and REX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation and Lumia 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 Lumia are associated (or correlated) with REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Lumia i.e., Lumia and REX FANG go up and down completely randomly.
Pair Corralation between Lumia and REX FANG
Assuming the 90 days trading horizon Lumia is expected to generate 44.37 times more return on investment than REX FANG. However, Lumia is 44.37 times more volatile than REX FANG Innovation. It trades about 0.04 of its potential returns per unit of risk. REX FANG Innovation is currently generating about 0.08 per unit of risk. If you would invest 0.00 in Lumia on October 11, 2024 and sell it today you would earn a total of 120.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 62.11% |
Values | Daily Returns |
Lumia vs. REX FANG Innovation
Performance |
Timeline |
Lumia |
REX FANG Innovation |
Lumia and REX FANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lumia and REX FANG
The main advantage of trading using opposite Lumia and REX FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, REX FANG 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 REX FANG will offset losses from the drop in REX FANG's long position.The idea behind Lumia and REX FANG Innovation 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.REX FANG vs. iShares Dividend and | REX FANG vs. Martin Currie Sustainable | REX FANG vs. VictoryShares THB Mid | REX FANG vs. Mast Global Battery |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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