Correlation Between LG Display and DAIMLER TRUCK
Can any of the company-specific risk be diversified away by investing in both LG Display and DAIMLER TRUCK 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 LG Display and DAIMLER TRUCK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and DAIMLER TRUCK SPADS12, you can compare the effects of market volatilities on LG Display and DAIMLER TRUCK 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 LG Display with a short position of DAIMLER TRUCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and DAIMLER TRUCK.
Diversification Opportunities for LG Display and DAIMLER TRUCK
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGA and DAIMLER is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and DAIMLER TRUCK SPADS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIMLER TRUCK SPADS12 and LG Display 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 LG Display Co are associated (or correlated) with DAIMLER TRUCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIMLER TRUCK SPADS12 has no effect on the direction of LG Display i.e., LG Display and DAIMLER TRUCK go up and down completely randomly.
Pair Corralation between LG Display and DAIMLER TRUCK
Assuming the 90 days horizon LG Display Co is expected to under-perform the DAIMLER TRUCK. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.04 times less risky than DAIMLER TRUCK. The stock trades about -0.02 of its potential returns per unit of risk. The DAIMLER TRUCK SPADS12 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,396 in DAIMLER TRUCK SPADS12 on August 29, 2024 and sell it today you would earn a total of 374.00 from holding DAIMLER TRUCK SPADS12 or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
LG Display Co vs. DAIMLER TRUCK SPADS12
Performance |
| Timeline |
| LG Display |
| DAIMLER TRUCK SPADS12 |
LG Display and DAIMLER TRUCK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and DAIMLER TRUCK
The main advantage of trading using opposite LG Display and DAIMLER TRUCK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, DAIMLER TRUCK 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 DAIMLER TRUCK will offset losses from the drop in DAIMLER TRUCK's long position.| LG Display vs. JAPAN TOBACCO UNSPADR12 | LG Display vs. Grupo Carso SAB | LG Display vs. XLMedia PLC | LG Display vs. Dave Busters Entertainment |
| DAIMLER TRUCK vs. Anheuser Busch InBev SANV | DAIMLER TRUCK vs. AALBERTS IND | DAIMLER TRUCK vs. SECURITAS B | DAIMLER TRUCK vs. VERISK ANLYTCS A |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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