Correlation Between LYFT and Energy
Can any of the company-specific risk be diversified away by investing in both LYFT and Energy 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 LYFT and Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYFT Inc and Energy and Water, you can compare the effects of market volatilities on LYFT and Energy 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 LYFT with a short position of Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYFT and Energy.
Diversification Opportunities for LYFT and Energy
Excellent diversification
The 3 months correlation between LYFT and Energy is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water and LYFT 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 LYFT Inc are associated (or correlated) with Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of LYFT i.e., LYFT and Energy go up and down completely randomly.
Pair Corralation between LYFT and Energy
Given the investment horizon of 90 days LYFT Inc is expected to generate 0.39 times more return on investment than Energy. However, LYFT Inc is 2.55 times less risky than Energy. It trades about 0.19 of its potential returns per unit of risk. Energy and Water is currently generating about -0.12 per unit of risk. If you would invest 1,391 in LYFT Inc on August 30, 2024 and sell it today you would earn a total of 327.00 from holding LYFT Inc or generate 23.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LYFT Inc vs. Energy and Water
Performance |
| Timeline |
| LYFT Inc |
| Energy and Water |
LYFT and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYFT and Energy
The main advantage of trading using opposite LYFT and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT position performs unexpectedly, Energy 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 Energy will offset losses from the drop in Energy's long position.The idea behind LYFT Inc and Energy and Water 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.| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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