Correlation Between Upstart Holdings and Lifco AB

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

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

Diversification Opportunities for Upstart Holdings and Lifco AB

-0.37

Correlation Coefficient

Upstart Holdings  Lifco AB

Very good diversification

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

Pair Corralation between Upstart Holdings and Lifco AB

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Lifco AB. In addition to that, Upstart Holdings is 1.0 times more volatile than Lifco AB. It trades about -0.26 of its total potential returns per unit of risk. Lifco AB is currently generating about 0.11 per unit of volatility. If you would invest  1,525  in Lifco AB on October 12, 2024 and sell it today you would earn a total of  134.00  from holding Lifco AB or generate 8.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Upstart Holdings  vs.  Lifco AB

Upstart Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lifco AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifco AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Lifco AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Upstart Holdings and Lifco AB

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

The idea behind Upstart Holdings and Lifco AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.