Correlation Between Lemonade and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both Lemonade and Aker Carbon 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 Lemonade and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and Aker Carbon Capture, you can compare the effects of market volatilities on Lemonade and Aker Carbon 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 Lemonade with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and Aker Carbon.
Diversification Opportunities for Lemonade and Aker Carbon
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lemonade and Aker is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Lemonade 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 Lemonade are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Lemonade i.e., Lemonade and Aker Carbon go up and down completely randomly.
Pair Corralation between Lemonade and Aker Carbon
Given the investment horizon of 90 days Lemonade is expected to generate 2.5 times more return on investment than Aker Carbon. However, Lemonade is 2.5 times more volatile than Aker Carbon Capture. It trades about 0.56 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.15 per unit of risk. If you would invest 1,864 in Lemonade on August 27, 2024 and sell it today you would earn a total of 3,064 from holding Lemonade or generate 164.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemonade vs. Aker Carbon Capture
Performance |
| Timeline |
| Lemonade |
| Aker Carbon Capture |
Lemonade and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and Aker Carbon
The main advantage of trading using opposite Lemonade and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade position performs unexpectedly, Aker Carbon 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 Aker Carbon will offset losses from the drop in Aker Carbon's long position.| Lemonade vs. Fiverr International | Lemonade vs. Pinterest | Lemonade vs. Upstart Holdings | Lemonade vs. Fastly Inc |
| Aker Carbon vs. TOMI Environmental Solutions | Aker Carbon vs. Zurn Elkay Water | Aker Carbon vs. Federal Signal | Aker Carbon vs. Energy Recovery |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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