Correlation Between LBA and EOSDT

Can any of the company-specific risk be diversified away by investing in both LBA and EOSDT 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 LBA and EOSDT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LBA and EOSDT, you can compare the effects of market volatilities on LBA and EOSDT 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 LBA with a short position of EOSDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBA and EOSDT.

Diversification Opportunities for LBA and EOSDT

-0.23

Correlation Coefficient

LBA  EOSDT

Very good diversification

The 3 months correlation between LBA and EOSDT is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LBA and EOSDT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOSDT and LBA 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 LBA are associated (or correlated) with EOSDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOSDT has no effect on the direction of LBA i.e., LBA and EOSDT go up and down completely randomly.

Pair Corralation between LBA and EOSDT

If you would invest  0.04  in LBA on January 29, 2024 and sell it today you would earn a total of  0.01  from holding LBA or generate 19.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.27%
Values	Daily Returns

LBA  vs.  EOSDT

LBA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LBA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LBA exhibited solid returns over the last few months and may actually be approaching a breakup point.

EOSDT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOSDT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, EOSDT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LBA and EOSDT

The main advantage of trading using opposite LBA and EOSDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBA position performs unexpectedly, EOSDT 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 EOSDT will offset losses from the drop in EOSDT's long position.

The idea behind LBA and EOSDT 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.