Correlation Between Spirent Communications and LBG Media
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and LBG Media 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 Spirent Communications and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and LBG Media PLC, you can compare the effects of market volatilities on Spirent Communications and LBG Media 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 Spirent Communications with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and LBG Media.
Diversification Opportunities for Spirent Communications and LBG Media
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and LBG is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Spirent Communications i.e., Spirent Communications and LBG Media go up and down completely randomly.
Pair Corralation between Spirent Communications and LBG Media
Assuming the 90 days trading horizon Spirent Communications is expected to generate 4.37 times less return on investment than LBG Media. But when comparing it to its historical volatility, Spirent Communications plc is 2.17 times less risky than LBG Media. It trades about 0.03 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13,000 in LBG Media PLC on August 26, 2024 and sell it today you would earn a total of 300.00 from holding LBG Media PLC or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. LBG Media PLC
Performance |
| Timeline |
| Spirent Communications |
| LBG Media PLC |
Spirent Communications and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and LBG Media
The main advantage of trading using opposite Spirent Communications and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
| LBG Media vs. SupplyMe Capital PLC | LBG Media vs. SM Energy Co | LBG Media vs. FuelCell Energy | LBG Media vs. Grand Vision Media |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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