Correlation Between United States and LG Display
Can any of the company-specific risk be diversified away by investing in both United States and LG Display 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 United States and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and LG Display Co, you can compare the effects of market volatilities on United States and LG Display 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 United States with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and LG Display.
Diversification Opportunities for United States and LG Display
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and LGA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and United States 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 United States Steel are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of United States i.e., United States and LG Display go up and down completely randomly.
Pair Corralation between United States and LG Display
Assuming the 90 days trading horizon United States Steel is expected to generate 1.35 times more return on investment than LG Display. However, United States is 1.35 times more volatile than LG Display Co. It trades about 0.29 of its potential returns per unit of risk. LG Display Co is currently generating about 0.01 per unit of risk. If you would invest 3,079 in United States Steel on November 6, 2024 and sell it today you would earn a total of 424.00 from holding United States Steel or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. LG Display Co
Performance |
| Timeline |
| United States Steel |
| LG Display |
United States and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and LG Display
The main advantage of trading using opposite United States and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, LG Display 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 Display will offset losses from the drop in LG Display's long position.| United States vs. ASURE SOFTWARE | United States vs. AGNC INVESTMENT | United States vs. New Residential Investment | United States vs. PennantPark Investment |
| LG Display vs. CHEMICAL INDUSTRIES | LG Display vs. Guidewire Software | LG Display vs. TIANDE CHEMICAL | LG Display vs. Mitsui Chemicals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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