Correlation Between LightPath Technologies and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both LightPath Technologies and Bel Fuse 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 LightPath Technologies and Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LightPath Technologies and Bel Fuse A, you can compare the effects of market volatilities on LightPath Technologies and Bel Fuse 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 LightPath Technologies with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of LightPath Technologies and Bel Fuse.
Diversification Opportunities for LightPath Technologies and Bel Fuse
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LightPath and Bel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A and LightPath Technologies 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 LightPath Technologies are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Bel Fuse go up and down completely randomly.
Pair Corralation between LightPath Technologies and Bel Fuse
Given the investment horizon of 90 days LightPath Technologies is expected to generate 1.93 times more return on investment than Bel Fuse. However, LightPath Technologies is 1.93 times more volatile than Bel Fuse A. It trades about -0.06 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.17 per unit of risk. If you would invest 160.00 in LightPath Technologies on August 24, 2024 and sell it today you would lose (10.00) from holding LightPath Technologies or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LightPath Technologies vs. Bel Fuse A
Performance |
| Timeline |
| LightPath Technologies |
| Bel Fuse A |
LightPath Technologies and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LightPath Technologies and Bel Fuse
The main advantage of trading using opposite LightPath Technologies and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightPath Technologies position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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