Correlation Between LG Display and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both LG Display and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on LG Display and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Fevertree Drinks.
Diversification Opportunities for LG Display and Fevertree Drinks
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LGA and Fevertree is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of LG Display i.e., LG Display and Fevertree Drinks go up and down completely randomly.
Pair Corralation between LG Display and Fevertree Drinks
Assuming the 90 days horizon LG Display is expected to generate 19.17 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, LG Display Co is 2.86 times less risky than Fevertree Drinks. It trades about 0.03 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 795.00 in Fevertree Drinks PLC on November 3, 2024 and sell it today you would earn a total of 145.00 from holding Fevertree Drinks PLC or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Fevertree Drinks PLC
Performance |
| Timeline |
| LG Display |
| Fevertree Drinks PLC |
LG Display and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Fevertree Drinks
The main advantage of trading using opposite LG Display and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| LG Display vs. T Mobile | LG Display vs. WillScot Mobile Mini | LG Display vs. Geely Automobile Holdings | LG Display vs. National Beverage Corp |
| Fevertree Drinks vs. ZURICH INSURANCE GROUP | Fevertree Drinks vs. American Eagle Outfitters | Fevertree Drinks vs. BII Railway Transportation | Fevertree Drinks vs. Gaztransport Technigaz SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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