Correlation Between Albemarle and LENSAR
Can any of the company-specific risk be diversified away by investing in both Albemarle and LENSAR 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 Albemarle and LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle and LENSAR Inc, you can compare the effects of market volatilities on Albemarle and LENSAR 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 Albemarle with a short position of LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle and LENSAR.
Diversification Opportunities for Albemarle and LENSAR
Very good diversification
The 3 months correlation between Albemarle and LENSAR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Albemarle 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 Albemarle are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Albemarle i.e., Albemarle and LENSAR go up and down completely randomly.
Pair Corralation between Albemarle and LENSAR
Assuming the 90 days trading horizon Albemarle is expected to generate 8.75 times less return on investment than LENSAR. But when comparing it to its historical volatility, Albemarle is 2.21 times less risky than LENSAR. It trades about 0.06 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 894.00 in LENSAR Inc on November 1, 2024 and sell it today you would earn a total of 201.00 from holding LENSAR Inc or generate 22.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Albemarle vs. LENSAR Inc
Performance |
| Timeline |
| Albemarle |
| LENSAR Inc |
Albemarle and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle and LENSAR
The main advantage of trading using opposite Albemarle and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| Albemarle vs. SEI Investments | Albemarle vs. Reservoir Media | Albemarle vs. Iridium Communications | Albemarle vs. Pinterest |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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