Correlation Between LAMB and MCO
Can any of the company-specific risk be diversified away by investing in both LAMB and MCO 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 LAMB and MCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMB and MCO, you can compare the effects of market volatilities on LAMB and MCO 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 LAMB with a short position of MCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMB and MCO.
Diversification Opportunities for LAMB and MCO
Pay attention - limited upside
The 3 months correlation between LAMB and MCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LAMB and MCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO and LAMB 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 LAMB are associated (or correlated) with MCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCO has no effect on the direction of LAMB i.e., LAMB and MCO go up and down completely randomly.
Pair Corralation between LAMB and MCO
If you would invest 0.36 in LAMB on January 25, 2024 and sell it today you would earn a total of 0.35 from holding LAMB or generate 97.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.19% |
| Values | Daily Returns |
LAMB vs. MCO
Performance |
| Timeline |
| LAMB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| MCO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
LAMB and MCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAMB and MCO
The main advantage of trading using opposite LAMB and MCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMB position performs unexpectedly, MCO 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 MCO will offset losses from the drop in MCO's long position.The idea behind LAMB and MCO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |