Correlation Between Lords Company and Global Hemp
Can any of the company-specific risk be diversified away by investing in both Lords Company and Global Hemp 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 Lords Company and Global Hemp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lords Company Worldwide and Global Hemp Group, you can compare the effects of market volatilities on Lords Company and Global Hemp 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 Lords Company with a short position of Global Hemp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lords Company and Global Hemp.
Diversification Opportunities for Lords Company and Global Hemp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lords and Global is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lords Company Worldwide and Global Hemp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hemp Group and Lords Company 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 Lords Company Worldwide are associated (or correlated) with Global Hemp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hemp Group has no effect on the direction of Lords Company i.e., Lords Company and Global Hemp go up and down completely randomly.
Pair Corralation between Lords Company and Global Hemp
Assuming the 90 days horizon Lords Company Worldwide is expected to generate 4.84 times more return on investment than Global Hemp. However, Lords Company is 4.84 times more volatile than Global Hemp Group. It trades about 0.21 of its potential returns per unit of risk. Global Hemp Group is currently generating about 0.06 per unit of risk. If you would invest 0.02 in Lords Company Worldwide on August 29, 2024 and sell it today you would earn a total of 0.07 from holding Lords Company Worldwide or generate 350.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lords Company Worldwide vs. Global Hemp Group
Performance |
| Timeline |
| Lords Worldwide |
| Global Hemp Group |
Lords Company and Global Hemp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lords Company and Global Hemp
The main advantage of trading using opposite Lords Company and Global Hemp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lords Company position performs unexpectedly, Global Hemp 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 Global Hemp will offset losses from the drop in Global Hemp's long position.The idea behind Lords Company Worldwide and Global Hemp Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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