Correlation Between Eventide Limitedterm and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Eventide Limitedterm and Lgm Risk 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 Eventide Limitedterm and Lgm Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eventide Limitedterm Bond and Lgm Risk Managed, you can compare the effects of market volatilities on Eventide Limitedterm and Lgm Risk 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 Eventide Limitedterm with a short position of Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eventide Limitedterm and Lgm Risk.
Diversification Opportunities for Eventide Limitedterm and Lgm Risk
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eventide and Lgm is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Limitedterm Bond and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk Managed and Eventide Limitedterm 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 Eventide Limitedterm Bond are associated (or correlated) with Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Eventide Limitedterm i.e., Eventide Limitedterm and Lgm Risk go up and down completely randomly.
Pair Corralation between Eventide Limitedterm and Lgm Risk
Assuming the 90 days horizon Eventide Limitedterm is expected to generate 1.16 times less return on investment than Lgm Risk. But when comparing it to its historical volatility, Eventide Limitedterm Bond is 2.23 times less risky than Lgm Risk. It trades about 0.3 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,146 in Lgm Risk Managed on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Lgm Risk Managed or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eventide Limitedterm Bond vs. Lgm Risk Managed
Performance |
| Timeline |
| Eventide Limitedterm Bond |
| Lgm Risk Managed |
Eventide Limitedterm and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eventide Limitedterm and Lgm Risk
The main advantage of trading using opposite Eventide Limitedterm and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Limitedterm position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.The idea behind Eventide Limitedterm Bond and Lgm Risk Managed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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