Correlation Between LPKF Laser and Extra Space
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Extra Space 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 LPKF Laser and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Extra Space Storage, you can compare the effects of market volatilities on LPKF Laser and Extra Space 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 LPKF Laser with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Extra Space.
Diversification Opportunities for LPKF Laser and Extra Space
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LPKF and Extra is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of LPKF Laser i.e., LPKF Laser and Extra Space go up and down completely randomly.
Pair Corralation between LPKF Laser and Extra Space
Assuming the 90 days trading horizon LPKF Laser Electronics is expected to under-perform the Extra Space. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.82 times less risky than Extra Space. The stock trades about -0.11 of its potential returns per unit of risk. The Extra Space Storage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 16,499 in Extra Space Storage on August 31, 2024 and sell it today you would earn a total of 866.00 from holding Extra Space Storage or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Extra Space Storage
Performance |
| Timeline |
| LPKF Laser Electronics |
| Extra Space Storage |
LPKF Laser and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Extra Space
The main advantage of trading using opposite LPKF Laser and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser vs. JLEN Environmental Assets |
| Extra Space vs. Neometals | Extra Space vs. Coor Service Management | Extra Space vs. Aeorema Communications Plc | Extra Space vs. JLEN Environmental Assets |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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