Correlation Between Lemonade and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Lemonade and Fortum Oyj 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 Fortum Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and Fortum Oyj ADR, you can compare the effects of market volatilities on Lemonade and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and Fortum Oyj.
Diversification Opportunities for Lemonade and Fortum Oyj
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lemonade and Fortum is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Fortum Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj ADR 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj ADR has no effect on the direction of Lemonade i.e., Lemonade and Fortum Oyj go up and down completely randomly.
Pair Corralation between Lemonade and Fortum Oyj
Given the investment horizon of 90 days Lemonade is expected to generate 2.68 times more return on investment than Fortum Oyj. However, Lemonade is 2.68 times more volatile than Fortum Oyj ADR. It trades about 0.06 of its potential returns per unit of risk. Fortum Oyj ADR is currently generating about 0.01 per unit of risk. If you would invest 1,822 in Lemonade on August 24, 2024 and sell it today you would earn a total of 3,106 from holding Lemonade or generate 170.47% 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. Fortum Oyj ADR
Performance |
| Timeline |
| Lemonade |
| Fortum Oyj ADR |
Lemonade and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and Fortum Oyj
The main advantage of trading using opposite Lemonade and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Lemonade vs. Amtech Systems | Lemonade vs. Gold Fields Ltd | Lemonade vs. Aegean Airlines SA | Lemonade vs. Merck Company |
| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Astra Energy | Fortum Oyj vs. Powertap Hydrogen Capital | Fortum Oyj vs. Brenmiller Energy Ltd |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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