Correlation Between LM Funding and Cosmos Group
Can any of the company-specific risk be diversified away by investing in both LM Funding and Cosmos Group 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 LM Funding and Cosmos Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LM Funding America and Cosmos Group Holdings, you can compare the effects of market volatilities on LM Funding and Cosmos Group 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 LM Funding with a short position of Cosmos Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LM Funding and Cosmos Group.
Diversification Opportunities for LM Funding and Cosmos Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between LMFA and Cosmos is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LM Funding America and Cosmos Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Group Holdings and LM Funding 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 LM Funding America are associated (or correlated) with Cosmos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Group Holdings has no effect on the direction of LM Funding i.e., LM Funding and Cosmos Group go up and down completely randomly.
Pair Corralation between LM Funding and Cosmos Group
Given the investment horizon of 90 days LM Funding America is expected to under-perform the Cosmos Group. But the stock apears to be less risky and, when comparing its historical volatility, LM Funding America is 31.79 times less risky than Cosmos Group. The stock trades about -0.03 of its potential returns per unit of risk. The Cosmos Group Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Cosmos Group Holdings on August 28, 2024 and sell it today you would lose (0.01) from holding Cosmos Group Holdings or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
LM Funding America vs. Cosmos Group Holdings
Performance |
| Timeline |
| LM Funding America |
| Cosmos Group Holdings |
LM Funding and Cosmos Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LM Funding and Cosmos Group
The main advantage of trading using opposite LM Funding and Cosmos Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LM Funding position performs unexpectedly, Cosmos Group 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 Cosmos Group will offset losses from the drop in Cosmos Group's long position.| LM Funding vs. X Financial Class | LM Funding vs. Nisun International Enterprise | LM Funding vs. Sentage Holdings | LM Funding vs. Cosmos Group Holdings |
| Cosmos Group vs. Element Solutions | Cosmos Group vs. Orion Engineered Carbons | Cosmos Group vs. Minerals Technologies | Cosmos Group vs. Ingevity Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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