Correlation Between Telefonaktiebolaget and LendingTree
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and LendingTree 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 Telefonaktiebolaget and LendingTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and LendingTree, you can compare the effects of market volatilities on Telefonaktiebolaget and LendingTree 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 Telefonaktiebolaget with a short position of LendingTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and LendingTree.
Diversification Opportunities for Telefonaktiebolaget and LendingTree
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and LendingTree is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and LendingTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingTree and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson are associated (or correlated) with LendingTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingTree has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and LendingTree go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and LendingTree
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.15 times more return on investment than LendingTree. However, Telefonaktiebolaget LM Ericsson is 6.68 times less risky than LendingTree. It trades about -0.09 of its potential returns per unit of risk. LendingTree is currently generating about -0.09 per unit of risk. If you would invest 780.00 in Telefonaktiebolaget LM Ericsson on August 30, 2024 and sell it today you would lose (15.00) from holding Telefonaktiebolaget LM Ericsson or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. LendingTree
Performance |
| Timeline |
| Telefonaktiebolaget |
| LendingTree |
Telefonaktiebolaget and LendingTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and LendingTree
The main advantage of trading using opposite Telefonaktiebolaget and LendingTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, LendingTree 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 LendingTree will offset losses from the drop in LendingTree's long position.| Telefonaktiebolaget vs. Cisco Systems | Telefonaktiebolaget vs. Superior Plus Corp | Telefonaktiebolaget vs. SIVERS SEMICONDUCTORS AB | Telefonaktiebolaget vs. Talanx AG |
| LendingTree vs. DATANG INTL POW | LendingTree vs. NTT DATA | LendingTree vs. Sumitomo Mitsui Construction | LendingTree vs. North American Construction |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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