Correlation Between LMF Acquisition and EVgo Equity
Can any of the company-specific risk be diversified away by investing in both LMF Acquisition and EVgo Equity 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 EVgo Equity 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 EVgo Equity Warrants, you can compare the effects of market volatilities on LMF Acquisition and EVgo Equity 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 EVgo Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of LMF Acquisition and EVgo Equity.
Diversification Opportunities for LMF Acquisition and EVgo Equity
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between LMF and EVgo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding LMF Acquisition Opportunities and EVgo Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVgo Equity Warrants 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 EVgo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVgo Equity Warrants has no effect on the direction of LMF Acquisition i.e., LMF Acquisition and EVgo Equity go up and down completely randomly.
Pair Corralation between LMF Acquisition and EVgo Equity
Assuming the 90 days horizon LMF Acquisition Opportunities is expected to generate 1.56 times more return on investment than EVgo Equity. However, LMF Acquisition is 1.56 times more volatile than EVgo Equity Warrants. It trades about 0.18 of its potential returns per unit of risk. EVgo Equity Warrants is currently generating about -0.16 per unit of risk. If you would invest 3.25 in LMF Acquisition Opportunities on January 9, 2025 and sell it today you would earn a total of 1.25 from holding LMF Acquisition Opportunities or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LMF Acquisition Opportunities vs. EVgo Equity Warrants
Performance |
| Timeline |
| LMF Acquisition Oppo |
| EVgo Equity Warrants |
LMF Acquisition and EVgo Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LMF Acquisition and EVgo Equity
The main advantage of trading using opposite LMF Acquisition and EVgo Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LMF Acquisition position performs unexpectedly, EVgo Equity 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 EVgo Equity will offset losses from the drop in EVgo Equity's long position.| LMF Acquisition vs. LMF Acquisition Opportunities | LMF Acquisition vs. Cardio Diagnostics Holdings | LMF Acquisition vs. Revelation Biosciences | LMF Acquisition vs. OmniAb Inc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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