Correlation Between L Catterton and Learn CW
Can any of the company-specific risk be diversified away by investing in both L Catterton and Learn CW 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 L Catterton and Learn CW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Catterton Asia and Learn CW Investment, you can compare the effects of market volatilities on L Catterton and Learn CW 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 L Catterton with a short position of Learn CW. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and Learn CW.
Diversification Opportunities for L Catterton and Learn CW
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between LCAA and Learn is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and Learn CW Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Learn CW Investment and L Catterton 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 L Catterton Asia are associated (or correlated) with Learn CW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Learn CW Investment has no effect on the direction of L Catterton i.e., L Catterton and Learn CW go up and down completely randomly.
Pair Corralation between L Catterton and Learn CW
Given the investment horizon of 90 days L Catterton Asia is expected to generate 0.19 times more return on investment than Learn CW. However, L Catterton Asia is 5.15 times less risky than Learn CW. It trades about 0.14 of its potential returns per unit of risk. Learn CW Investment is currently generating about 0.02 per unit of risk. If you would invest 1,004 in L Catterton Asia on September 3, 2024 and sell it today you would earn a total of 46.00 from holding L Catterton Asia or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 33.7% |
| Values | Daily Returns |
L Catterton Asia vs. Learn CW Investment
Performance |
| Timeline |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Learn CW Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
L Catterton and Learn CW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Catterton and Learn CW
The main advantage of trading using opposite L Catterton and Learn CW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Catterton position performs unexpectedly, Learn CW 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 Learn CW will offset losses from the drop in Learn CW's long position.The idea behind L Catterton Asia and Learn CW Investment 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.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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