Correlation Between LG Battery and HANetf ICAV
Can any of the company-specific risk be diversified away by investing in both LG Battery and HANetf ICAV 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 LG Battery and HANetf ICAV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Battery Value Chain and HANetf ICAV , you can compare the effects of market volatilities on LG Battery and HANetf ICAV 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 LG Battery with a short position of HANetf ICAV. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Battery and HANetf ICAV.
Diversification Opportunities for LG Battery and HANetf ICAV
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BATE and HANetf is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding LG Battery Value Chain and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV and LG Battery 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 LG Battery Value Chain are associated (or correlated) with HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of LG Battery i.e., LG Battery and HANetf ICAV go up and down completely randomly.
Pair Corralation between LG Battery and HANetf ICAV
Assuming the 90 days trading horizon LG Battery Value Chain is expected to generate 0.96 times more return on investment than HANetf ICAV. However, LG Battery Value Chain is 1.05 times less risky than HANetf ICAV. It trades about 0.11 of its potential returns per unit of risk. HANetf ICAV is currently generating about -0.08 per unit of risk. If you would invest 1,608 in LG Battery Value Chain on October 26, 2024 and sell it today you would earn a total of 75.00 from holding LG Battery Value Chain or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Battery Value Chain vs. HANetf ICAV
Performance |
| Timeline |
| LG Battery Value |
| HANetf ICAV |
LG Battery and HANetf ICAV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Battery and HANetf ICAV
The main advantage of trading using opposite LG Battery and HANetf ICAV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Battery position performs unexpectedly, HANetf ICAV 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 HANetf ICAV will offset losses from the drop in HANetf ICAV's long position.| LG Battery vs. UBS Fund Solutions | LG Battery vs. Xtrackers II | LG Battery vs. Xtrackers Nikkei 225 | LG Battery vs. iShares VII PLC |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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