Correlation Between NYSE Composite and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lumos Pharma 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 Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lumos Pharma, you can compare the effects of market volatilities on NYSE Composite and Lumos Pharma 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 Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lumos Pharma.
Diversification Opportunities for NYSE Composite and Lumos Pharma
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Lumos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma 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 Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lumos Pharma go up and down completely randomly.
Pair Corralation between NYSE Composite and Lumos Pharma
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.14 times less return on investment than Lumos Pharma. But when comparing it to its historical volatility, NYSE Composite is 7.2 times less risky than Lumos Pharma. It trades about 0.11 of its potential returns per unit of risk. Lumos Pharma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Lumos Pharma on August 31, 2024 and sell it today you would earn a total of 67.00 from holding Lumos Pharma or generate 18.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
NYSE Composite vs. Lumos Pharma
Performance |
| Timeline |
NYSE Composite and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lumos Pharma
Pair trading matchups for Lumos Pharma
Pair Trading with NYSE Composite and Lumos Pharma
The main advantage of trading using opposite NYSE Composite and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lumos Pharma 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 Lumos Pharma will offset losses from the drop in Lumos Pharma's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Lumos Pharma vs. Shattuck Labs | Lumos Pharma vs. Eliem Therapeutics | Lumos Pharma vs. Champions Oncology | Lumos Pharma vs. Century Therapeutics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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