Correlation Between Lycos Energy and NBI Global

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

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

Diversification Opportunities for Lycos Energy and NBI Global

0.6

Correlation Coefficient

Lycos Energy  NBI Global

Poor diversification

The 3 months correlation between Lycos and NBI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lycos Energy and NBI Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Global Real and Lycos Energy 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 Lycos Energy are associated (or correlated) with NBI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Global Real has no effect on the direction of Lycos Energy i.e., Lycos Energy and NBI Global go up and down completely randomly.

Pair Corralation between Lycos Energy and NBI Global

Assuming the 90 days horizon Lycos Energy is expected to generate 3.76 times more return on investment than NBI Global. However, Lycos Energy is 3.76 times more volatile than NBI Global Real. It trades about 0.08 of its potential returns per unit of risk. NBI Global Real is currently generating about 0.19 per unit of risk. If you would invest  315.00  in Lycos Energy on February 22, 2024 and sell it today you would earn a total of  32.00  from holding Lycos Energy or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lycos Energy  vs.  NBI Global Real

Lycos Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lycos Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lycos Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

NBI Global Real

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Global Real are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, NBI Global may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Lycos Energy and NBI Global

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

The idea behind Lycos Energy and NBI Global Real 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.