Correlation Between Sage Group and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both Sage Group and Livermore Investments 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 Sage Group and Livermore Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and Livermore Investments Group, you can compare the effects of market volatilities on Sage Group and Livermore Investments 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 Sage Group with a short position of Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Livermore Investments.
Diversification Opportunities for Sage Group and Livermore Investments
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sage and Livermore is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments and Sage Group 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 Sage Group PLC are associated (or correlated) with Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Sage Group i.e., Sage Group and Livermore Investments go up and down completely randomly.
Pair Corralation between Sage Group and Livermore Investments
Assuming the 90 days trading horizon Sage Group is expected to generate 8.8 times less return on investment than Livermore Investments. But when comparing it to its historical volatility, Sage Group PLC is 5.72 times less risky than Livermore Investments. It trades about 0.12 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,550 in Livermore Investments Group on October 12, 2024 and sell it today you would earn a total of 650.00 from holding Livermore Investments Group or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sage Group PLC vs. Livermore Investments Group
Performance |
| Timeline |
| Sage Group PLC |
| Livermore Investments |
Sage Group and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Livermore Investments
The main advantage of trading using opposite Sage Group and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| Sage Group vs. Sydbank | Sage Group vs. Sparebank 1 SR | Sage Group vs. Morgan Advanced Materials | Sage Group vs. Martin Marietta Materials |
| Livermore Investments vs. GreenX Metals | Livermore Investments vs. URU Metals | Livermore Investments vs. European Metals Holdings | Livermore Investments vs. DXC Technology Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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