Correlation Between LIFENET INSURANCE and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and Spirent Communications 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 LIFENET INSURANCE and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and Spirent Communications plc, you can compare the effects of market volatilities on LIFENET INSURANCE and Spirent Communications 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 LIFENET INSURANCE with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Spirent Communications.
Diversification Opportunities for LIFENET INSURANCE and Spirent Communications
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between LIFENET and Spirent is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and LIFENET INSURANCE 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 LIFENET INSURANCE CO are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Spirent Communications go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Spirent Communications
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 0.64 times more return on investment than Spirent Communications. However, LIFENET INSURANCE CO is 1.57 times less risky than Spirent Communications. It trades about 0.05 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.0 per unit of risk. If you would invest 780.00 in LIFENET INSURANCE CO on September 3, 2024 and sell it today you would earn a total of 450.00 from holding LIFENET INSURANCE CO or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Spirent Communications plc
Performance |
| Timeline |
| LIFENET INSURANCE |
| Spirent Communications |
LIFENET INSURANCE and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Spirent Communications
The main advantage of trading using opposite LIFENET INSURANCE and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| LIFENET INSURANCE vs. TOWNSQUARE MEDIA INC | LIFENET INSURANCE vs. ATRESMEDIA | LIFENET INSURANCE vs. PT Global Mediacom | LIFENET INSURANCE vs. Flutter Entertainment PLC |
| Spirent Communications vs. Addus HomeCare | Spirent Communications vs. United Rentals | Spirent Communications vs. Hyster Yale Materials Handling | Spirent Communications vs. Corporate Office Properties |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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