Correlation Between Methanex and Lsb Industries
Can any of the company-specific risk be diversified away by investing in both Methanex and Lsb Industries 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 Methanex and Lsb Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methanex and Lsb Industries, you can compare the effects of market volatilities on Methanex and Lsb Industries 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 Methanex with a short position of Lsb Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methanex and Lsb Industries.
Diversification Opportunities for Methanex and Lsb Industries
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Methanex and Lsb is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Methanex and Lsb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsb Industries and Methanex 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 Methanex are associated (or correlated) with Lsb Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsb Industries has no effect on the direction of Methanex i.e., Methanex and Lsb Industries go up and down completely randomly.
Pair Corralation between Methanex and Lsb Industries
Given the investment horizon of 90 days Methanex is expected to generate 1.21 times less return on investment than Lsb Industries. But when comparing it to its historical volatility, Methanex is 1.63 times less risky than Lsb Industries. It trades about 0.17 of its potential returns per unit of risk. Lsb Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 771.00 in Lsb Industries on August 26, 2024 and sell it today you would earn a total of 124.00 from holding Lsb Industries or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methanex vs. Lsb Industries
Performance |
| Timeline |
| Methanex |
| Lsb Industries |
Methanex and Lsb Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methanex and Lsb Industries
The main advantage of trading using opposite Methanex and Lsb Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methanex position performs unexpectedly, Lsb Industries 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 Lsb Industries will offset losses from the drop in Lsb Industries' long position.| Methanex vs. AdvanSix | Methanex vs. Lsb Industries | Methanex vs. Green Plains Renewable | Methanex vs. Tronox Holdings PLC |
| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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