Correlation Between Livermore Investments and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Livermore Investments and EJF Investments 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 Livermore Investments and EJF Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and EJF Investments, you can compare the effects of market volatilities on Livermore Investments and EJF Investments 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 Livermore Investments with a short position of EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and EJF Investments.
Diversification Opportunities for Livermore Investments and EJF Investments
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Livermore and EJF is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Livermore Investments i.e., Livermore Investments and EJF Investments go up and down completely randomly.
Pair Corralation between Livermore Investments and EJF Investments
Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 1.3 times more return on investment than EJF Investments. However, Livermore Investments is 1.3 times more volatile than EJF Investments. It trades about 0.22 of its potential returns per unit of risk. EJF Investments is currently generating about 0.14 per unit of risk. If you would invest 3,644 in Livermore Investments Group on November 2, 2024 and sell it today you would earn a total of 2,206 from holding Livermore Investments Group or generate 60.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. EJF Investments
Performance |
| Timeline |
| Livermore Investments |
| EJF Investments |
Livermore Investments and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and EJF Investments
The main advantage of trading using opposite Livermore Investments and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Livermore Investments vs. bet at home AG | Livermore Investments vs. Made Tech Group | Livermore Investments vs. Fortune Brands Home | Livermore Investments vs. Eneraqua Technologies PLC |
| EJF Investments vs. SupplyMe Capital PLC | EJF Investments vs. Premier African Minerals | EJF Investments vs. SANTANDER UK 8 | EJF Investments vs. Tower Resources plc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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