Correlation Between Ecofin Global and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Ecofin Global and LPKF Laser 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 Ecofin Global and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and LPKF Laser Electronics, you can compare the effects of market volatilities on Ecofin Global and LPKF Laser 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 Ecofin Global with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and LPKF Laser.
Diversification Opportunities for Ecofin Global and LPKF Laser
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecofin and LPKF is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Ecofin Global 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 Ecofin Global Utilities are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Ecofin Global i.e., Ecofin Global and LPKF Laser go up and down completely randomly.
Pair Corralation between Ecofin Global and LPKF Laser
Assuming the 90 days trading horizon Ecofin Global Utilities is expected to generate 0.81 times more return on investment than LPKF Laser. However, Ecofin Global Utilities is 1.23 times less risky than LPKF Laser. It trades about 0.04 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.04 per unit of risk. If you would invest 18,289 in Ecofin Global Utilities on November 6, 2024 and sell it today you would earn a total of 511.00 from holding Ecofin Global Utilities or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. LPKF Laser Electronics
Performance |
| Timeline |
| Ecofin Global Utilities |
| LPKF Laser Electronics |
Ecofin Global and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and LPKF Laser
The main advantage of trading using opposite Ecofin Global and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Ecofin Global vs. Edinburgh Investment Trust | Ecofin Global vs. Herald Investment Trust | Ecofin Global vs. EJF Investments | Ecofin Global vs. Bankers Investment Trust |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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