Correlation Between LIFE + and Trimble
Can any of the company-specific risk be diversified away by investing in both LIFE + and Trimble 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 LIFE + and Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and Trimble, you can compare the effects of market volatilities on LIFE + and Trimble 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 LIFE + with a short position of Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and Trimble.
Diversification Opportunities for LIFE + and Trimble
Almost no diversification
The 3 months correlation between LIFE and Trimble is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of LIFE + i.e., LIFE + and Trimble go up and down completely randomly.
Pair Corralation between LIFE + and Trimble
Assuming the 90 days horizon LIFE + is expected to generate 1.52 times less return on investment than Trimble. But when comparing it to its historical volatility, LIFE BANC SPLIT is 1.32 times less risky than Trimble. It trades about 0.2 of its potential returns per unit of risk. Trimble is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,632 in Trimble on August 31, 2024 and sell it today you would earn a total of 1,202 from holding Trimble or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
LIFE BANC SPLIT vs. Trimble
Performance |
| Timeline |
| LIFE BANC SPLIT |
| Trimble |
LIFE + and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE + and Trimble
The main advantage of trading using opposite LIFE + and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| LIFE + vs. SEKISUI CHEMICAL | LIFE + vs. Chongqing Machinery Electric | LIFE + vs. TIANDE CHEMICAL | LIFE + vs. AGRICULTBK HADR25 YC |
| Trimble vs. Singapore Telecommunications Limited | Trimble vs. CODERE ONLINE LUX | Trimble vs. Gamma Communications plc | Trimble vs. BOS BETTER ONLINE |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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