Correlation Between LYFT and Firm Capital
Can any of the company-specific risk be diversified away by investing in both LYFT and Firm Capital 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 Firm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYFT Inc and Firm Capital Property, you can compare the effects of market volatilities on LYFT and Firm Capital 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 Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYFT and Firm Capital.
Diversification Opportunities for LYFT and Firm Capital
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LYFT and Firm is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of LYFT i.e., LYFT and Firm Capital go up and down completely randomly.
Pair Corralation between LYFT and Firm Capital
Given the investment horizon of 90 days LYFT Inc is expected to generate 6.21 times more return on investment than Firm Capital. However, LYFT is 6.21 times more volatile than Firm Capital Property. It trades about 0.21 of its potential returns per unit of risk. Firm Capital Property is currently generating about -0.03 per unit of risk. If you would invest 1,389 in LYFT Inc on August 28, 2024 and sell it today you would earn a total of 372.00 from holding LYFT Inc or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LYFT Inc vs. Firm Capital Property
Performance |
| Timeline |
| LYFT Inc |
| Firm Capital Property |
LYFT and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYFT and Firm Capital
The main advantage of trading using opposite LYFT and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.The idea behind LYFT Inc and Firm Capital Property 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.| Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. Highlands REIT | Firm Capital vs. W P Carey |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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