Correlation Between Locorr Market and Extended Market
Can any of the company-specific risk be diversified away by investing in both Locorr Market and Extended Market 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 Locorr Market and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Market Trend and Extended Market Index, you can compare the effects of market volatilities on Locorr Market and Extended Market 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 Locorr Market with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Market and Extended Market.
Diversification Opportunities for Locorr Market and Extended Market
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Locorr and Extended is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Market Trend and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Locorr Market 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 Locorr Market Trend are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Locorr Market i.e., Locorr Market and Extended Market go up and down completely randomly.
Pair Corralation between Locorr Market and Extended Market
Assuming the 90 days horizon Locorr Market Trend is expected to generate 0.16 times more return on investment than Extended Market. However, Locorr Market Trend is 6.15 times less risky than Extended Market. It trades about 0.04 of its potential returns per unit of risk. Extended Market Index is currently generating about -0.28 per unit of risk. If you would invest 1,035 in Locorr Market Trend on October 11, 2024 and sell it today you would earn a total of 3.00 from holding Locorr Market Trend or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Locorr Market Trend vs. Extended Market Index
Performance |
| Timeline |
| Locorr Market Trend |
| Extended Market Index |
Locorr Market and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Locorr Market and Extended Market
The main advantage of trading using opposite Locorr Market and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Market position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Locorr Market vs. Fidelity Advisor Energy | Locorr Market vs. Vanguard Energy Index | Locorr Market vs. Hennessy Bp Energy | Locorr Market vs. Firsthand Alternative Energy |
| Extended Market vs. M Large Cap | Extended Market vs. Qs Large Cap | Extended Market vs. Fundamental Large Cap | Extended Market vs. Guidemark Large Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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