Correlation Between LHA Market and Retireful

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

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

Diversification Opportunities for LHA Market and Retireful

0.29

Correlation Coefficient

LHA Market  Retireful

Modest diversification

The 3 months correlation between LHA and Retireful is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LHA Market State and Retireful in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retireful and LHA Market 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 LHA Market State are associated (or correlated) with Retireful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retireful has no effect on the direction of LHA Market i.e., LHA Market and Retireful go up and down completely randomly.

Pair Corralation between LHA Market and Retireful

Given the investment horizon of 90 days LHA Market State is expected to under-perform the Retireful. But the etf apears to be less risky and, when comparing its historical volatility, LHA Market State is 1.46 times less risky than Retireful. The etf trades about -0.07 of its potential returns per unit of risk. The Retireful is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,070  in Retireful on September 5, 2024 and sell it today you would earn a total of  97.00  from holding Retireful or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.25%
Values	Daily Returns

LHA Market State  vs.  Retireful

LHA Market State

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LHA Market State has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, LHA Market is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Retireful

Risk-Adjusted Performance

0 of 100

Strong

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

Pair Trading with LHA Market and Retireful

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

The idea behind LHA Market State and Retireful 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.