Correlation Between Tungsten West and LBG Media
Can any of the company-specific risk be diversified away by investing in both Tungsten West 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 Tungsten West and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tungsten West PLC and LBG Media PLC, you can compare the effects of market volatilities on Tungsten West 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 Tungsten West with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tungsten West and LBG Media.
Diversification Opportunities for Tungsten West and LBG Media
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tungsten and LBG is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tungsten West 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 Tungsten West 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 Tungsten West 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 Tungsten West i.e., Tungsten West and LBG Media go up and down completely randomly.
Pair Corralation between Tungsten West and LBG Media
Assuming the 90 days trading horizon Tungsten West is expected to generate 1.62 times less return on investment than LBG Media. In addition to that, Tungsten West is 3.32 times more volatile than LBG Media PLC. It trades about 0.0 of its total potential returns per unit of risk. LBG Media PLC is currently generating about 0.02 per unit of volatility. If you would invest 11,000 in LBG Media PLC on September 13, 2024 and sell it today you would earn a total of 1,400 from holding LBG Media PLC or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tungsten West PLC vs. LBG Media PLC
Performance |
| Timeline |
| Tungsten West PLC |
| LBG Media PLC |
Tungsten West and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tungsten West and LBG Media
The main advantage of trading using opposite Tungsten West and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tungsten West 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.| Tungsten West vs. Givaudan SA | Tungsten West vs. Antofagasta PLC | Tungsten West vs. Ferrexpo PLC | Tungsten West vs. Atalaya Mining |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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