Correlation Between LMF Acquisition and Dow Jones
Can any of the company-specific risk be diversified away by investing in both LMF Acquisition and Dow Jones 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 LMF Acquisition and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LMF Acquisition Opportunities and Dow Jones Industrial, you can compare the effects of market volatilities on LMF Acquisition and Dow Jones 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 LMF Acquisition with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of LMF Acquisition and Dow Jones.
Diversification Opportunities for LMF Acquisition and Dow Jones
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LMF and Dow is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding LMF Acquisition Opportunities and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and LMF Acquisition 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 LMF Acquisition Opportunities are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of LMF Acquisition i.e., LMF Acquisition and Dow Jones go up and down completely randomly.
Pair Corralation between LMF Acquisition and Dow Jones
Considering the 90-day investment horizon LMF Acquisition Opportunities is expected to under-perform the Dow Jones. In addition to that, LMF Acquisition is 14.22 times more volatile than Dow Jones Industrial. It trades about -0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,080,201 from holding Dow Jones Industrial or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LMF Acquisition Opportunities vs. Dow Jones Industrial
Performance |
| Timeline |
LMF Acquisition and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
LMF Acquisition Opportunities
Pair trading matchups for LMF Acquisition
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with LMF Acquisition and Dow Jones
The main advantage of trading using opposite LMF Acquisition and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LMF Acquisition position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| LMF Acquisition vs. ZyVersa Therapeutics | LMF Acquisition vs. Sonnet Biotherapeutics Holdings | LMF Acquisition vs. Revelation Biosciences | LMF Acquisition vs. Quoin Pharmaceuticals Ltd |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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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