Correlation Between Lmp Automotive and Xcel Brands

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

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

Diversification Opportunities for Lmp Automotive and Xcel Brands

0.88

Correlation Coefficient

Lmp Automotive  Xcel Brands

Very poor diversification

The 3 months correlation between Lmp and Xcel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lmp Automotive Holdings and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and Lmp Automotive 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 Lmp Automotive Holdings are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Lmp Automotive i.e., Lmp Automotive and Xcel Brands go up and down completely randomly.

Pair Corralation between Lmp Automotive and Xcel Brands

If you would invest  700.00  in Lmp Automotive Holdings on February 11, 2024 and sell it today you would earn a total of  0.00  from holding Lmp Automotive Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.55%
Values	Daily Returns

Lmp Automotive Holdings  vs.  Xcel Brands

Lmp Automotive Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lmp Automotive Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lmp Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xcel Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lmp Automotive and Xcel Brands

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

The idea behind Lmp Automotive Holdings and Xcel Brands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.