Correlation Between NYSE Composite and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lucara Diamond 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 NYSE Composite and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lucara Diamond Corp, you can compare the effects of market volatilities on NYSE Composite and Lucara Diamond 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 NYSE Composite with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lucara Diamond.
Diversification Opportunities for NYSE Composite and Lucara Diamond
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Lucara is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lucara Diamond go up and down completely randomly.
Pair Corralation between NYSE Composite and Lucara Diamond
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.14 times more return on investment than Lucara Diamond. However, NYSE Composite is 7.17 times less risky than Lucara Diamond. It trades about 0.43 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.04 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 102,865 from holding NYSE Composite or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Lucara Diamond Corp
Performance |
| Timeline |
NYSE Composite and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lucara Diamond Corp
Pair trading matchups for Lucara Diamond
Pair Trading with NYSE Composite and Lucara Diamond
The main advantage of trading using opposite NYSE Composite and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Lucara Diamond vs. Advantage Solutions | Lucara Diamond vs. Atlas Corp | Lucara Diamond vs. PureCycle Technologies | Lucara Diamond vs. WM Technology |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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