Correlation Between Riot Blockchain and LPL Financial

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

By analyzing existing cross correlation between Riot Blockchain and LPL Financial Holdings, you can compare the effects of market volatilities on Riot Blockchain and LPL Financial 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 Riot Blockchain with a short position of LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riot Blockchain and LPL Financial.

Diversification Opportunities for Riot Blockchain and LPL Financial

0.37

Correlation Coefficient

Riot Blockchain  LPL Financial

Weak diversification

The 3 months correlation between Riot and LPL is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Riot Blockchain and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings and Riot Blockchain 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 Riot Blockchain are associated (or correlated) with LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Riot Blockchain i.e., Riot Blockchain and LPL Financial go up and down completely randomly.

Pair Corralation between Riot Blockchain and LPL Financial

Given the investment horizon of 90 days Riot Blockchain is expected to under-perform the LPL Financial. In addition to that, Riot Blockchain is 2.65 times more volatile than LPL Financial Holdings. It trades about -0.06 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.03 per unit of volatility. If you would invest  33,559  in LPL Financial Holdings on December 26, 2024 and sell it today you would earn a total of  695.00  from holding LPL Financial Holdings or generate 2.07% return on investment over 90 days.

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

Riot Blockchain  vs.  LPL Financial Holdings

Riot Blockchain

Risk-Adjusted Performance

Very Weak

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

LPL Financial Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, LPL Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Riot Blockchain and LPL Financial

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

The idea behind Riot Blockchain and LPL Financial Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.