Correlation Between LAMB and Stellar
Can any of the company-specific risk be diversified away by investing in both LAMB and Stellar 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 Stellar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMB and Stellar, you can compare the effects of market volatilities on LAMB and Stellar 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 Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMB and Stellar.
Diversification Opportunities for LAMB and Stellar
Poor diversification
The 3 months correlation between LAMB and Stellar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LAMB and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar 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 Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of LAMB i.e., LAMB and Stellar go up and down completely randomly.
Pair Corralation between LAMB and Stellar
Assuming the 90 days trading horizon LAMB is expected to generate 2.87 times more return on investment than Stellar. However, LAMB is 2.87 times more volatile than Stellar. It trades about 0.32 of its potential returns per unit of risk. Stellar is currently generating about 0.09 per unit of risk. If you would invest 0.42 in LAMB on December 29, 2023 and sell it today you would earn a total of 0.55 from holding LAMB or generate 132.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LAMB vs. Stellar
Performance |
Timeline |
LAMB |
Stellar |
LAMB and Stellar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LAMB and Stellar
The main advantage of trading using opposite LAMB and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMB position performs unexpectedly, Stellar 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 Stellar will offset losses from the drop in Stellar's long position.The idea behind LAMB and Stellar 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Stocks Directory Find actively traded stocks across global markets | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Transaction History View history of all your transactions and understand their impact on performance | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |