Correlation Between LFM Properties and RFM Corp
Can any of the company-specific risk be diversified away by investing in both LFM Properties and RFM Corp 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 LFM Properties and RFM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LFM Properties Corp and RFM Corp, you can compare the effects of market volatilities on LFM Properties and RFM Corp 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 LFM Properties with a short position of RFM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and RFM Corp.
Diversification Opportunities for LFM Properties and RFM Corp
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LFM and RFM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp and RFM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFM Corp and LFM Properties 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 LFM Properties Corp are associated (or correlated) with RFM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFM Corp has no effect on the direction of LFM Properties i.e., LFM Properties and RFM Corp go up and down completely randomly.
Pair Corralation between LFM Properties and RFM Corp
Assuming the 90 days trading horizon LFM Properties Corp is expected to under-perform the RFM Corp. In addition to that, LFM Properties is 6.76 times more volatile than RFM Corp. It trades about 0.0 of its total potential returns per unit of risk. RFM Corp is currently generating about 0.03 per unit of volatility. If you would invest 369.00 in RFM Corp on September 1, 2024 and sell it today you would earn a total of 21.00 from holding RFM Corp or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.16% |
| Values | Daily Returns |
LFM Properties Corp vs. RFM Corp
Performance |
| Timeline |
| LFM Properties Corp |
| RFM Corp |
LFM Properties and RFM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LFM Properties and RFM Corp
The main advantage of trading using opposite LFM Properties and RFM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LFM Properties position performs unexpectedly, RFM Corp 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 RFM Corp will offset losses from the drop in RFM Corp's long position.| LFM Properties vs. Concepcion Industrial Corp | LFM Properties vs. Apex Mining Co | LFM Properties vs. Metropolitan Bank Trust | LFM Properties vs. Philex Mining 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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