Correlation Between LAMF Global and Talon 1
Can any of the company-specific risk be diversified away by investing in both LAMF Global and Talon 1 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 LAMF Global and Talon 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMF Global Ventures and Talon 1 Acquisition, you can compare the effects of market volatilities on LAMF Global and Talon 1 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 LAMF Global with a short position of Talon 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMF Global and Talon 1.
Diversification Opportunities for LAMF Global and Talon 1
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between LAMF and Talon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LAMF Global Ventures and Talon 1 Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon 1 Acquisition and LAMF Global 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 LAMF Global Ventures are associated (or correlated) with Talon 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon 1 Acquisition has no effect on the direction of LAMF Global i.e., LAMF Global and Talon 1 go up and down completely randomly.
Pair Corralation between LAMF Global and Talon 1
Assuming the 90 days horizon LAMF Global is expected to generate 2.58 times less return on investment than Talon 1. But when comparing it to its historical volatility, LAMF Global Ventures is 1.52 times less risky than Talon 1. It trades about 0.01 of its potential returns per unit of risk. Talon 1 Acquisition is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,029 in Talon 1 Acquisition on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Talon 1 Acquisition or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.97% |
| Values | Daily Returns |
LAMF Global Ventures vs. Talon 1 Acquisition
Performance |
| Timeline |
| LAMF Global Ventures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Talon 1 Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LAMF Global and Talon 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAMF Global and Talon 1
The main advantage of trading using opposite LAMF Global and Talon 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMF Global position performs unexpectedly, Talon 1 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 Talon 1 will offset losses from the drop in Talon 1's long position.The idea behind LAMF Global Ventures and Talon 1 Acquisition 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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