Correlation Between LQwD FinTech and IES Holdings
Can any of the company-specific risk be diversified away by investing in both LQwD FinTech and IES Holdings 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 LQwD FinTech and IES Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LQwD FinTech Corp and IES Holdings, you can compare the effects of market volatilities on LQwD FinTech and IES Holdings 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 LQwD FinTech with a short position of IES Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LQwD FinTech and IES Holdings.
Diversification Opportunities for LQwD FinTech and IES Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LQwD and IES is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and IES Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IES Holdings and LQwD FinTech 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 LQwD FinTech Corp are associated (or correlated) with IES Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IES Holdings has no effect on the direction of LQwD FinTech i.e., LQwD FinTech and IES Holdings go up and down completely randomly.
Pair Corralation between LQwD FinTech and IES Holdings
Assuming the 90 days horizon LQwD FinTech Corp is expected to generate 2.22 times more return on investment than IES Holdings. However, LQwD FinTech is 2.22 times more volatile than IES Holdings. It trades about 0.11 of its potential returns per unit of risk. IES Holdings is currently generating about 0.16 per unit of risk. If you would invest 42.00 in LQwD FinTech Corp on September 4, 2024 and sell it today you would earn a total of 125.00 from holding LQwD FinTech Corp or generate 297.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LQwD FinTech Corp vs. IES Holdings
Performance |
| Timeline |
| LQwD FinTech Corp |
| IES Holdings |
LQwD FinTech and IES Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LQwD FinTech and IES Holdings
The main advantage of trading using opposite LQwD FinTech and IES Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LQwD FinTech position performs unexpectedly, IES Holdings 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 IES Holdings will offset losses from the drop in IES Holdings' long position.| LQwD FinTech vs. Salesforce | LQwD FinTech vs. SAP SE ADR | LQwD FinTech vs. ServiceNow | LQwD FinTech vs. Intuit Inc |
| IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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