Correlation Between Trump Media and Locafy
Can any of the company-specific risk be diversified away by investing in both Trump Media and Locafy 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 Trump Media and Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trump Media Technology and Locafy, you can compare the effects of market volatilities on Trump Media and Locafy 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 Trump Media with a short position of Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and Locafy.
Diversification Opportunities for Trump Media and Locafy
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trump and Locafy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Locafy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy and Trump Media 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 Trump Media Technology are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy has no effect on the direction of Trump Media i.e., Trump Media and Locafy go up and down completely randomly.
Pair Corralation between Trump Media and Locafy
Considering the 90-day investment horizon Trump Media Technology is expected to generate 0.81 times more return on investment than Locafy. However, Trump Media Technology is 1.23 times less risky than Locafy. It trades about 0.06 of its potential returns per unit of risk. Locafy is currently generating about 0.04 per unit of risk. If you would invest 1,814 in Trump Media Technology on August 24, 2024 and sell it today you would earn a total of 1,235 from holding Trump Media Technology or generate 68.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trump Media Technology vs. Locafy
Performance |
| Timeline |
| Trump Media Technology |
| Locafy |
Trump Media and Locafy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trump Media and Locafy
The main advantage of trading using opposite Trump Media and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy's long position.| Trump Media vs. Lincoln Electric Holdings | Trump Media vs. ASE Industrial Holding | Trump Media vs. Spectrum Brands Holdings | Trump Media vs. Timken Company |
| Locafy vs. Metalpha Technology Holding | Locafy vs. 36Kr Holdings | Locafy vs. TuanChe ADR | Locafy vs. Quizam Media |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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