Correlation Between Latch and Indie Semiconductor
Can any of the company-specific risk be diversified away by investing in both Latch and Indie Semiconductor 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 Indie Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latch Inc and Indie Semiconductor Warrant, you can compare the effects of market volatilities on Latch and Indie Semiconductor 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 Indie Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latch and Indie Semiconductor.
Diversification Opportunities for Latch and Indie Semiconductor
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Latch and Indie is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Latch Inc and Indie Semiconductor Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indie Semiconductor 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 Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indie Semiconductor has no effect on the direction of Latch i.e., Latch and Indie Semiconductor go up and down completely randomly.
Pair Corralation between Latch and Indie Semiconductor
Assuming the 90 days horizon Latch Inc is expected to generate 3.78 times more return on investment than Indie Semiconductor. However, Latch is 3.78 times more volatile than Indie Semiconductor Warrant. It trades about 0.12 of its potential returns per unit of risk. Indie Semiconductor Warrant is currently generating about 0.04 per unit of risk. If you would invest 9.00 in Latch Inc on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Latch Inc or generate 88.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Latch Inc vs. Indie Semiconductor Warrant
Performance |
| Timeline |
| Latch Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Indie Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Latch and Indie Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latch and Indie Semiconductor
The main advantage of trading using opposite Latch and Indie Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latch position performs unexpectedly, Indie Semiconductor 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 Indie Semiconductor will offset losses from the drop in Indie Semiconductor's long position.The idea behind Latch Inc and Indie Semiconductor Warrant 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.| Indie Semiconductor vs. Nuvve Holding Corp | Indie Semiconductor vs. EVgo Equity Warrants | Indie Semiconductor vs. Paysafe Ltd Wt | Indie Semiconductor vs. Microvast Holdings |
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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