Correlation Between LBG Media and Rockwood Realisation
Can any of the company-specific risk be diversified away by investing in both LBG Media and Rockwood Realisation 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 LBG Media and Rockwood Realisation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Rockwood Realisation PLC, you can compare the effects of market volatilities on LBG Media and Rockwood Realisation 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 LBG Media with a short position of Rockwood Realisation. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Rockwood Realisation.
Diversification Opportunities for LBG Media and Rockwood Realisation
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LBG and Rockwood is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Rockwood Realisation PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwood Realisation PLC and LBG Media 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 LBG Media PLC are associated (or correlated) with Rockwood Realisation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwood Realisation PLC has no effect on the direction of LBG Media i.e., LBG Media and Rockwood Realisation go up and down completely randomly.
Pair Corralation between LBG Media and Rockwood Realisation
Assuming the 90 days trading horizon LBG Media is expected to generate 1.14 times less return on investment than Rockwood Realisation. In addition to that, LBG Media is 6.81 times more volatile than Rockwood Realisation PLC. It trades about 0.06 of its total potential returns per unit of risk. Rockwood Realisation PLC is currently generating about 0.5 per unit of volatility. If you would invest 26,200 in Rockwood Realisation PLC on October 20, 2024 and sell it today you would earn a total of 850.00 from holding Rockwood Realisation PLC or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Rockwood Realisation PLC
Performance |
| Timeline |
| LBG Media PLC |
| Rockwood Realisation PLC |
LBG Media and Rockwood Realisation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Rockwood Realisation
The main advantage of trading using opposite LBG Media and Rockwood Realisation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Rockwood Realisation 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 Rockwood Realisation will offset losses from the drop in Rockwood Realisation's long position.| LBG Media vs. Golden Metal Resources | LBG Media vs. URU Metals | LBG Media vs. Bisichi Mining PLC | LBG Media vs. Coeur Mining |
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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 Correlations module to find global opportunities by holding instruments from different markets.
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