Correlation Between Diversified Energy and LBG Media
Can any of the company-specific risk be diversified away by investing in both Diversified Energy and LBG Media 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 Diversified Energy and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Energy and LBG Media PLC, you can compare the effects of market volatilities on Diversified Energy and LBG Media 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 Diversified Energy with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Energy and LBG Media.
Diversification Opportunities for Diversified Energy and LBG Media
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diversified and LBG is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Energy and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Diversified Energy 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 Diversified Energy are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Diversified Energy i.e., Diversified Energy and LBG Media go up and down completely randomly.
Pair Corralation between Diversified Energy and LBG Media
Assuming the 90 days trading horizon Diversified Energy is expected to generate 1.45 times more return on investment than LBG Media. However, Diversified Energy is 1.45 times more volatile than LBG Media PLC. It trades about 0.49 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.01 per unit of risk. If you would invest 89,730 in Diversified Energy on August 30, 2024 and sell it today you would earn a total of 34,270 from holding Diversified Energy or generate 38.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Energy vs. LBG Media PLC
Performance |
| Timeline |
| Diversified Energy |
| LBG Media PLC |
Diversified Energy and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Energy and LBG Media
The main advantage of trading using opposite Diversified Energy and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Energy position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Diversified Energy vs. Zoom Video Communications | Diversified Energy vs. Enbridge | Diversified Energy vs. Endo International PLC | Diversified Energy vs. Games Workshop Group |
| LBG Media vs. SupplyMe Capital PLC | LBG Media vs. Lloyds Banking Group | LBG Media vs. Premier African Minerals | LBG Media vs. SANTANDER UK 8 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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