Correlation Between Stellar and LEGAL GENERAL

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

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

Diversification Opportunities for Stellar and LEGAL GENERAL

-0.63

Correlation Coefficient

Stellar  LEGAL GENERAL

Excellent diversification

The 3 months correlation between Stellar and LEGAL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and LEGAL GENERAL UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL UCITS and Stellar 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 Stellar are associated (or correlated) with LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL UCITS has no effect on the direction of Stellar i.e., Stellar and LEGAL GENERAL go up and down completely randomly.

Pair Corralation between Stellar and LEGAL GENERAL

Assuming the 90 days trading horizon Stellar is expected to under-perform the LEGAL GENERAL. In addition to that, Stellar is 8.75 times more volatile than LEGAL GENERAL UCITS. It trades about -0.06 of its total potential returns per unit of risk. LEGAL GENERAL UCITS is currently generating about 0.15 per unit of volatility. If you would invest  92,115  in LEGAL GENERAL UCITS on December 21, 2024 and sell it today you would earn a total of  5,055  from holding LEGAL GENERAL UCITS or generate 5.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.25%
Values	Daily Returns

Stellar  vs.  LEGAL GENERAL UCITS

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Stellar shareholders.

LEGAL GENERAL UCITS

Risk-Adjusted Performance

Good

Over the last 90 days LEGAL GENERAL UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, LEGAL GENERAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Stellar and LEGAL GENERAL

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

The idea behind Stellar and LEGAL GENERAL UCITS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.