Correlation Between STAG Industrial, and LPL Financial

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

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

Diversification Opportunities for STAG Industrial, and LPL Financial

-0.38

Correlation Coefficient

STAG Industrial,  LPL Financial

Very good diversification

The 3 months correlation between STAG and LPL is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial, 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 STAG Industrial, 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 STAG Industrial, 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 STAG Industrial, i.e., STAG Industrial, and LPL Financial go up and down completely randomly.

Pair Corralation between STAG Industrial, and LPL Financial

Assuming the 90 days trading horizon STAG Industrial, is expected to generate 6.83 times less return on investment than LPL Financial. But when comparing it to its historical volatility, STAG Industrial, is 1.79 times less risky than LPL Financial. It trades about 0.02 of its potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,945  in LPL Financial Holdings on October 26, 2024 and sell it today you would earn a total of  4,807  from holding LPL Financial Holdings or generate 69.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.96%
Values	Daily Returns

STAG Industrial,  vs.  LPL Financial Holdings

STAG Industrial,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAG Industrial, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STAG Industrial, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LPL Financial Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STAG Industrial, and LPL Financial

The main advantage of trading using opposite STAG Industrial, and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial, 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 STAG Industrial, 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.