Correlation Between Lightwave Logic and Innospec
Can any of the company-specific risk be diversified away by investing in both Lightwave Logic and Innospec 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 Lightwave Logic and Innospec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lightwave Logic and Innospec, you can compare the effects of market volatilities on Lightwave Logic and Innospec 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 Lightwave Logic with a short position of Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightwave Logic and Innospec.
Diversification Opportunities for Lightwave Logic and Innospec
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lightwave and Innospec is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lightwave Logic and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec and Lightwave Logic 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 Lightwave Logic are associated (or correlated) with Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of Lightwave Logic i.e., Lightwave Logic and Innospec go up and down completely randomly.
Pair Corralation between Lightwave Logic and Innospec
Given the investment horizon of 90 days Lightwave Logic is expected to under-perform the Innospec. In addition to that, Lightwave Logic is 2.93 times more volatile than Innospec. It trades about -0.02 of its total potential returns per unit of risk. Innospec is currently generating about 0.02 per unit of volatility. If you would invest 10,618 in Innospec on August 28, 2024 and sell it today you would earn a total of 1,377 from holding Innospec or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lightwave Logic vs. Innospec
Performance |
| Timeline |
| Lightwave Logic |
| Innospec |
Lightwave Logic and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lightwave Logic and Innospec
The main advantage of trading using opposite Lightwave Logic and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightwave Logic position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| Lightwave Logic vs. H B Fuller | Lightwave Logic vs. Element Solutions | Lightwave Logic vs. Innospec | Lightwave Logic vs. Cabot |
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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