Correlation Between MOUNTAIN LAKE and Global Lights

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

By analyzing existing cross correlation between MOUNTAIN LAKE ACQUISITION and Global Lights Acquisition, you can compare the effects of market volatilities on MOUNTAIN LAKE and Global Lights 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 MOUNTAIN LAKE with a short position of Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOUNTAIN LAKE and Global Lights.

Diversification Opportunities for MOUNTAIN LAKE and Global Lights

-0.36

Correlation Coefficient

MOUNTAIN LAKE  Global Lights

Very good diversification

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

Pair Corralation between MOUNTAIN LAKE and Global Lights

If you would invest  21.00  in Global Lights Acquisition on October 25, 2024 and sell it today you would lose (5.99) from holding Global Lights Acquisition or give up 28.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

MOUNTAIN LAKE ACQUISITION  vs.  Global Lights Acquisition

MOUNTAIN LAKE ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Lights Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Global Lights Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent fundamental indicators, Global Lights reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOUNTAIN LAKE and Global Lights

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

The idea behind MOUNTAIN LAKE ACQUISITION and Global Lights Acquisition 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.