Correlation Between FLEX LNG and AXS 2X
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and AXS 2X 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 FLEX LNG and AXS 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and AXS 2X Innovation, you can compare the effects of market volatilities on FLEX LNG and AXS 2X 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 FLEX LNG with a short position of AXS 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and AXS 2X.
Diversification Opportunities for FLEX LNG and AXS 2X
Modest diversification
The 3 months correlation between FLEX and AXS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and AXS 2X Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 2X Innovation and FLEX LNG 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 FLEX LNG are associated (or correlated) with AXS 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 2X Innovation has no effect on the direction of FLEX LNG i.e., FLEX LNG and AXS 2X go up and down completely randomly.
Pair Corralation between FLEX LNG and AXS 2X
Given the investment horizon of 90 days FLEX LNG is expected to generate 0.43 times more return on investment than AXS 2X. However, FLEX LNG is 2.34 times less risky than AXS 2X. It trades about -0.11 of its potential returns per unit of risk. AXS 2X Innovation is currently generating about -0.07 per unit of risk. If you would invest 2,444 in FLEX LNG on November 25, 2024 and sell it today you would lose (113.00) from holding FLEX LNG or give up 4.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
FLEX LNG vs. AXS 2X Innovation
Performance |
Timeline |
FLEX LNG |
AXS 2X Innovation |
FLEX LNG and AXS 2X Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FLEX LNG and AXS 2X
The main advantage of trading using opposite FLEX LNG and AXS 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, AXS 2X 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 AXS 2X will offset losses from the drop in AXS 2X's long position.FLEX LNG vs. Frontline | ||
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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