Correlation Between Reinsurance Group and LG Display
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and LG Display 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 Reinsurance Group and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and LG Display Co, you can compare the effects of market volatilities on Reinsurance Group and LG Display 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 Reinsurance Group with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and LG Display.
Diversification Opportunities for Reinsurance Group and LG Display
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reinsurance and LGA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Reinsurance 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 Reinsurance Group of are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and LG Display go up and down completely randomly.
Pair Corralation between Reinsurance Group and LG Display
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 1.31 times more return on investment than LG Display. However, Reinsurance Group is 1.31 times more volatile than LG Display Co. It trades about 0.0 of its potential returns per unit of risk. LG Display Co is currently generating about -0.14 per unit of risk. If you would invest 19,714 in Reinsurance Group of on September 24, 2024 and sell it today you would lose (214.00) from holding Reinsurance Group of or give up 1.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Reinsurance Group of vs. LG Display Co
Performance |
Timeline |
Reinsurance Group |
LG Display |
Reinsurance Group and LG Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reinsurance Group and LG Display
The main advantage of trading using opposite Reinsurance Group and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. Swiss Re AG | Reinsurance Group vs. HANNRUECKVSE ADR 12ON | Reinsurance Group vs. Everest Group |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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