Correlation Between LGI and Clime Investment
Can any of the company-specific risk be diversified away by investing in both LGI and Clime Investment 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 LGI and Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI and Clime Investment Management, you can compare the effects of market volatilities on LGI and Clime Investment 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 LGI with a short position of Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI and Clime Investment.
Diversification Opportunities for LGI and Clime Investment
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between LGI and Clime is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LGI and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and LGI 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 LGI are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of LGI i.e., LGI and Clime Investment go up and down completely randomly.
Pair Corralation between LGI and Clime Investment
Assuming the 90 days trading horizon LGI is expected to generate 3.19 times less return on investment than Clime Investment. In addition to that, LGI is 1.93 times more volatile than Clime Investment Management. It trades about 0.03 of its total potential returns per unit of risk. Clime Investment Management is currently generating about 0.16 per unit of volatility. If you would invest 36.00 in Clime Investment Management on November 8, 2024 and sell it today you would earn a total of 2.00 from holding Clime Investment Management or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI vs. Clime Investment Management
Performance |
| Timeline |
| LGI |
| Clime Investment Man |
LGI and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI and Clime Investment
The main advantage of trading using opposite LGI and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI position performs unexpectedly, Clime Investment 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| LGI vs. Energy Resources | LGI vs. 88 Energy | LGI vs. A1 Investments Resources | LGI vs. Coronado Global Resources |
| Clime Investment vs. Aurelia Metals | Clime Investment vs. Duketon Mining | Clime Investment vs. Sky Metals | Clime Investment vs. Meeka Metals Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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