Correlation Between Luna Innovations and Mind Technology
Can any of the company-specific risk be diversified away by investing in both Luna Innovations and Mind Technology 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 Luna Innovations and Mind Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luna Innovations Incorporated and Mind Technology, you can compare the effects of market volatilities on Luna Innovations and Mind Technology 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 Luna Innovations with a short position of Mind Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luna Innovations and Mind Technology.
Diversification Opportunities for Luna Innovations and Mind Technology
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luna and Mind is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Luna Innovations Incorporated and Mind Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology and Luna Innovations 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 Luna Innovations Incorporated are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology has no effect on the direction of Luna Innovations i.e., Luna Innovations and Mind Technology go up and down completely randomly.
Pair Corralation between Luna Innovations and Mind Technology
Given the investment horizon of 90 days Luna Innovations is expected to generate 1.24 times less return on investment than Mind Technology. In addition to that, Luna Innovations is 2.34 times more volatile than Mind Technology. It trades about 0.06 of its total potential returns per unit of risk. Mind Technology is currently generating about 0.17 per unit of volatility. If you would invest 364.00 in Mind Technology on August 28, 2024 and sell it today you would earn a total of 26.00 from holding Mind Technology or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luna Innovations Incorporated vs. Mind Technology
Performance |
| Timeline |
| Luna Innovations |
| Mind Technology |
Luna Innovations and Mind Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luna Innovations and Mind Technology
The main advantage of trading using opposite Luna Innovations and Mind Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luna Innovations position performs unexpectedly, Mind Technology 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 Mind Technology will offset losses from the drop in Mind Technology's long position.| Luna Innovations vs. ESCO Technologies | Luna Innovations vs. Know Labs | Luna Innovations vs. Focus Universal | Luna Innovations vs. Sono Tek Corp |
| Mind Technology vs. Spectris plc | Mind Technology vs. Electro Sensors | Mind Technology vs. Sono Tek Corp | Mind Technology vs. Vishay Precision Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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