Correlation Between Profound Medical and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Profound Medical and Lycos 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 Profound Medical and Lycos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and Lycos Energy, you can compare the effects of market volatilities on Profound Medical and Lycos 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 Profound Medical with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Lycos Energy.
Diversification Opportunities for Profound Medical and Lycos Energy
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Profound and Lycos is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Profound Medical 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 Profound Medical Corp are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Profound Medical i.e., Profound Medical and Lycos Energy go up and down completely randomly.
Pair Corralation between Profound Medical and Lycos Energy
Assuming the 90 days trading horizon Profound Medical Corp is expected to generate 1.05 times more return on investment than Lycos Energy. However, Profound Medical is 1.05 times more volatile than Lycos Energy. It trades about 0.06 of its potential returns per unit of risk. Lycos Energy is currently generating about 0.06 per unit of risk. If you would invest 1,136 in Profound Medical Corp on September 5, 2024 and sell it today you would earn a total of 35.00 from holding Profound Medical Corp or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profound Medical Corp vs. Lycos Energy
Performance |
| Timeline |
| Profound Medical Corp |
| Lycos Energy |
Profound Medical and Lycos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and Lycos Energy
The main advantage of trading using opposite Profound Medical and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, Lycos 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 Lycos Energy will offset losses from the drop in Lycos Energy's long position.| Profound Medical vs. HLS Therapeutics | Profound Medical vs. Medicenna Therapeutics Corp | Profound Medical vs. Aptose Biosciences |
| Lycos Energy vs. Profound Medical Corp | Lycos Energy vs. Brookfield Office Properties | Lycos Energy vs. Marimaca Copper Corp | Lycos Energy vs. QC Copper and |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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