Correlation Between Power Ledger and LAMB
Can any of the company-specific risk be diversified away by investing in both Power Ledger and LAMB 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 Power Ledger and LAMB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and LAMB, you can compare the effects of market volatilities on Power Ledger and LAMB 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 Power Ledger with a short position of LAMB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and LAMB.
Diversification Opportunities for Power Ledger and LAMB
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and LAMB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and LAMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMB and Power Ledger 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 Power Ledger are associated (or correlated) with LAMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMB has no effect on the direction of Power Ledger i.e., Power Ledger and LAMB go up and down completely randomly.
Pair Corralation between Power Ledger and LAMB
Assuming the 90 days trading horizon Power Ledger is expected to generate 2.46 times less return on investment than LAMB. But when comparing it to its historical volatility, Power Ledger is 1.48 times less risky than LAMB. It trades about 0.05 of its potential returns per unit of risk. LAMB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.16 in LAMB on January 21, 2024 and sell it today you would earn a total of 0.44 from holding LAMB or generate 278.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Ledger vs. LAMB
Performance |
| Timeline |
| Power Ledger |
| LAMB |
Power Ledger and LAMB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Ledger and LAMB
The main advantage of trading using opposite Power Ledger and LAMB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, LAMB 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 LAMB will offset losses from the drop in LAMB's long position.| Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. The Open Network | Power Ledger vs. Staked Ether |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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