Correlation Between Everus Construction and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Everus Construction and Lotus Technology 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 Everus Construction and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everus Construction Group and Lotus Technology Warrants, you can compare the effects of market volatilities on Everus Construction and Lotus Technology 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 Everus Construction with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everus Construction and Lotus Technology.
Diversification Opportunities for Everus Construction and Lotus Technology
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Everus and Lotus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and Everus Construction 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 Everus Construction Group are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Everus Construction i.e., Everus Construction and Lotus Technology go up and down completely randomly.
Pair Corralation between Everus Construction and Lotus Technology
Considering the 90-day investment horizon Everus Construction is expected to generate 1.49 times less return on investment than Lotus Technology. But when comparing it to its historical volatility, Everus Construction Group is 1.68 times less risky than Lotus Technology. It trades about 0.09 of its potential returns per unit of risk. Lotus Technology Warrants is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Lotus Technology Warrants on November 9, 2024 and sell it today you would earn a total of 1.00 from holding Lotus Technology Warrants or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Everus Construction Group vs. Lotus Technology Warrants
Performance |
| Timeline |
| Everus Construction |
| Lotus Technology Warrants |
Everus Construction and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everus Construction and Lotus Technology
The main advantage of trading using opposite Everus Construction and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Everus Construction vs. Iridium Communications | Everus Construction vs. KVH Industries | Everus Construction vs. National CineMedia | Everus Construction vs. Modine Manufacturing |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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