Correlation Between Pure Storage and LG Display
Can any of the company-specific risk be diversified away by investing in both Pure Storage and LG Display 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 Pure Storage and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and LG Display Co, you can compare the effects of market volatilities on Pure Storage and LG Display 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 Pure Storage with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and LG Display.
Diversification Opportunities for Pure Storage and LG Display
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pure and LGA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Pure Storage 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 Pure Storage are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Pure Storage i.e., Pure Storage and LG Display go up and down completely randomly.
Pair Corralation between Pure Storage and LG Display
Assuming the 90 days horizon Pure Storage is expected to generate 2.19 times more return on investment than LG Display. However, Pure Storage is 2.19 times more volatile than LG Display Co. It trades about 0.06 of its potential returns per unit of risk. LG Display Co is currently generating about -0.11 per unit of risk. If you would invest 5,000 in Pure Storage on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Pure Storage or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pure Storage vs. LG Display Co
Performance |
| Timeline |
| Pure Storage |
| LG Display |
Pure Storage and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and LG Display
The main advantage of trading using opposite Pure Storage and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Pure Storage vs. Perdoceo Education | Pure Storage vs. Iridium Communications | Pure Storage vs. Ribbon Communications | Pure Storage vs. COMPUTERSHARE |
| LG Display vs. JAPAN TOBACCO UNSPADR12 | LG Display vs. Grupo Carso SAB | LG Display vs. XLMedia PLC | LG Display vs. Dave Busters Entertainment |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |