Correlation Between Definity Financial and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Lycos Energy 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 Definity Financial and Lycos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Lycos Energy, you can compare the effects of market volatilities on Definity Financial and Lycos Energy 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 Definity Financial with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Lycos Energy.
Diversification Opportunities for Definity Financial and Lycos Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Definity and Lycos is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Definity Financial i.e., Definity Financial and Lycos Energy go up and down completely randomly.
Pair Corralation between Definity Financial and Lycos Energy
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.45 times more return on investment than Lycos Energy. However, Definity Financial Corp is 2.23 times less risky than Lycos Energy. It trades about 0.13 of its potential returns per unit of risk. Lycos Energy is currently generating about -0.04 per unit of risk. If you would invest 4,603 in Definity Financial Corp on September 3, 2024 and sell it today you would earn a total of 1,250 from holding Definity Financial Corp or generate 27.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Lycos Energy
Performance |
| Timeline |
| Definity Financial Corp |
| Lycos Energy |
Definity Financial and Lycos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Lycos Energy
The main advantage of trading using opposite Definity Financial and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Lycos Energy 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 Lycos Energy will offset losses from the drop in Lycos Energy's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Lycos Energy vs. Converge Technology Solutions | Lycos Energy vs. Datable Technology Corp | Lycos Energy vs. Sparx Technology | Lycos Energy vs. Ocumetics Technology Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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