Correlation Between Latch and EPlus
Can any of the company-specific risk be diversified away by investing in both Latch and EPlus 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 Latch and EPlus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latch Inc and ePlus inc, you can compare the effects of market volatilities on Latch and EPlus 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 Latch with a short position of EPlus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latch and EPlus.
Diversification Opportunities for Latch and EPlus
Very good diversification
The 3 months correlation between Latch and EPlus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Latch Inc and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc and Latch 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 Latch Inc are associated (or correlated) with EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Latch i.e., Latch and EPlus go up and down completely randomly.
Pair Corralation between Latch and EPlus
Given the investment horizon of 90 days Latch Inc is expected to generate 3.47 times more return on investment than EPlus. However, Latch is 3.47 times more volatile than ePlus inc. It trades about 0.22 of its potential returns per unit of risk. ePlus inc is currently generating about 0.08 per unit of risk. If you would invest 75.00 in Latch Inc on August 27, 2024 and sell it today you would earn a total of 97.00 from holding Latch Inc or generate 129.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 13.99% |
| Values | Daily Returns |
Latch Inc vs. ePlus inc
Performance |
| Timeline |
| Latch Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ePlus inc |
Latch and EPlus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latch and EPlus
The main advantage of trading using opposite Latch and EPlus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latch position performs unexpectedly, EPlus 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 EPlus will offset losses from the drop in EPlus' long position.The idea behind Latch Inc and ePlus inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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