Correlation Between Momentum Group and Lagercrantz Group
Can any of the company-specific risk be diversified away by investing in both Momentum Group and Lagercrantz Group 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 Momentum Group and Lagercrantz Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentum Group AB and Lagercrantz Group AB, you can compare the effects of market volatilities on Momentum Group and Lagercrantz Group 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 Momentum Group with a short position of Lagercrantz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentum Group and Lagercrantz Group.
Diversification Opportunities for Momentum Group and Lagercrantz Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Momentum and Lagercrantz is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Momentum Group AB and Lagercrantz Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagercrantz Group and Momentum Group 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 Momentum Group AB are associated (or correlated) with Lagercrantz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagercrantz Group has no effect on the direction of Momentum Group i.e., Momentum Group and Lagercrantz Group go up and down completely randomly.
Pair Corralation between Momentum Group and Lagercrantz Group
Assuming the 90 days trading horizon Momentum Group is expected to generate 2.14 times less return on investment than Lagercrantz Group. In addition to that, Momentum Group is 1.75 times more volatile than Lagercrantz Group AB. It trades about 0.03 of its total potential returns per unit of risk. Lagercrantz Group AB is currently generating about 0.11 per unit of volatility. If you would invest 20,860 in Lagercrantz Group AB on September 12, 2024 and sell it today you would earn a total of 720.00 from holding Lagercrantz Group AB or generate 3.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Momentum Group AB vs. Lagercrantz Group AB
Performance |
Timeline |
Momentum Group AB |
Lagercrantz Group |
Momentum Group and Lagercrantz Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Momentum Group and Lagercrantz Group
The main advantage of trading using opposite Momentum Group and Lagercrantz Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum Group position performs unexpectedly, Lagercrantz Group 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 Lagercrantz Group will offset losses from the drop in Lagercrantz Group's long position.Momentum Group vs. Bergman Beving AB | Momentum Group vs. Lagercrantz Group AB | Momentum Group vs. AddLife AB | Momentum Group vs. Addtech AB |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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