Correlation Between Commerce Split and Lycos Energy

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

By analyzing existing cross correlation between Commerce Split Corp and Lycos Energy, you can compare the effects of market volatilities on Commerce Split and Lycos Energy 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 Commerce Split with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Split and Lycos Energy.

Diversification Opportunities for Commerce Split and Lycos Energy

-0.31

Correlation Coefficient

Commerce Split  Lycos Energy

Very good diversification

The 3 months correlation between Commerce and Lycos is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Split Corp and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Commerce Split 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 Commerce Split Corp are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Commerce Split i.e., Commerce Split and Lycos Energy go up and down completely randomly.

Pair Corralation between Commerce Split and Lycos Energy

Assuming the 90 days trading horizon Commerce Split Corp is expected to under-perform the Lycos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Commerce Split Corp is 2.66 times less risky than Lycos Energy. The stock trades about -0.32 of its potential returns per unit of risk. The Lycos Energy is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Lycos Energy on October 10, 2024 and sell it today you would lose (14.00) from holding Lycos Energy or give up 5.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Commerce Split Corp  vs.  Lycos Energy

Commerce Split Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Split Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Commerce Split may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Commerce Split and Lycos Energy

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

The idea behind Commerce Split Corp and Lycos Energy 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.