Correlation Between Wayside Technology and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Wayside Technology and LG Electronics 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 Wayside Technology and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayside Technology Group and LG Electronics, you can compare the effects of market volatilities on Wayside Technology and LG Electronics 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 Wayside Technology with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayside Technology and LG Electronics.
Diversification Opportunities for Wayside Technology and LG Electronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wayside and LGLG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Wayside Technology 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 Wayside Technology Group are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Wayside Technology i.e., Wayside Technology and LG Electronics go up and down completely randomly.
Pair Corralation between Wayside Technology and LG Electronics
Assuming the 90 days horizon Wayside Technology Group is expected to generate 0.84 times more return on investment than LG Electronics. However, Wayside Technology Group is 1.19 times less risky than LG Electronics. It trades about 0.0 of its potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of risk. If you would invest 12,100 in Wayside Technology Group on October 16, 2024 and sell it today you would lose (100.00) from holding Wayside Technology Group or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayside Technology Group vs. LG Electronics
Performance |
| Timeline |
| Wayside Technology |
| LG Electronics |
Wayside Technology and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayside Technology and LG Electronics
The main advantage of trading using opposite Wayside Technology and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Wayside Technology vs. Lendlease Group | Wayside Technology vs. Sixt Leasing SE | Wayside Technology vs. Global Ship Lease | Wayside Technology vs. MOVIE GAMES SA |
| LG Electronics vs. Advanced Medical Solutions | LG Electronics vs. PEPTONIC MEDICAL | LG Electronics vs. Wayside Technology Group | LG Electronics vs. MACOM Technology Solutions |
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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