Correlation Between BOS Better and LightPath Technologies
Can any of the company-specific risk be diversified away by investing in both BOS Better and LightPath Technologies 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 BOS Better and LightPath Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOS Better Online and LightPath Technologies, you can compare the effects of market volatilities on BOS Better and LightPath Technologies 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 BOS Better with a short position of LightPath Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and LightPath Technologies.
Diversification Opportunities for BOS Better and LightPath Technologies
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BOS and LightPath is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies and BOS Better 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 BOS Better Online are associated (or correlated) with LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of BOS Better i.e., BOS Better and LightPath Technologies go up and down completely randomly.
Pair Corralation between BOS Better and LightPath Technologies
Given the investment horizon of 90 days BOS Better is expected to generate 1.5 times less return on investment than LightPath Technologies. But when comparing it to its historical volatility, BOS Better Online is 1.47 times less risky than LightPath Technologies. It trades about 0.01 of its potential returns per unit of risk. LightPath Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 173.00 in LightPath Technologies on August 28, 2024 and sell it today you would lose (8.00) from holding LightPath Technologies or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOS Better Online vs. LightPath Technologies
Performance |
| Timeline |
| BOS Better Online |
| LightPath Technologies |
BOS Better and LightPath Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOS Better and LightPath Technologies
The main advantage of trading using opposite BOS Better and LightPath Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better position performs unexpectedly, LightPath Technologies 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 LightPath Technologies will offset losses from the drop in LightPath Technologies' long position.| BOS Better vs. Mynaric AG ADR | BOS Better vs. Knowles Cor | BOS Better vs. Comtech Telecommunications Corp | BOS Better vs. Ituran Location and |
| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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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