Correlation Between Luna Innovations and Energous

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

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

Diversification Opportunities for Luna Innovations and Energous

0.66

Correlation Coefficient

Luna Innovations  Energous

Poor diversification

The 3 months correlation between Luna and Energous is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Luna Innovations Incorporated and Energous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energous and Luna Innovations 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 Luna Innovations Incorporated are associated (or correlated) with Energous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energous has no effect on the direction of Luna Innovations i.e., Luna Innovations and Energous go up and down completely randomly.

Pair Corralation between Luna Innovations and Energous

Given the investment horizon of 90 days Luna Innovations Incorporated is expected to generate 1.0 times more return on investment than Energous. However, Luna Innovations is 1.0 times more volatile than Energous. It trades about 0.09 of its potential returns per unit of risk. Energous is currently generating about -0.15 per unit of risk. If you would invest  166.00  in Luna Innovations Incorporated on September 2, 2024 and sell it today you would earn a total of  10.00  from holding Luna Innovations Incorporated or generate 6.02% return on investment over 90 days.

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

Luna Innovations Incorporated  vs.  Energous

Luna Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Luna Innovations Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Energous

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Luna Innovations and Energous

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

The idea behind Luna Innovations Incorporated and Energous 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.