Correlation Between Lotus Bakeries and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Lotus Bakeries and NYSE Composite 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 Lotus Bakeries and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Bakeries and NYSE Composite, you can compare the effects of market volatilities on Lotus Bakeries and NYSE Composite 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 Lotus Bakeries with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Bakeries and NYSE Composite.
Diversification Opportunities for Lotus Bakeries and NYSE Composite
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotus and NYSE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Bakeries and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Lotus Bakeries 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 Lotus Bakeries are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Lotus Bakeries i.e., Lotus Bakeries and NYSE Composite go up and down completely randomly.
Pair Corralation between Lotus Bakeries and NYSE Composite
Assuming the 90 days trading horizon Lotus Bakeries is expected to generate 1.99 times more return on investment than NYSE Composite. However, Lotus Bakeries is 1.99 times more volatile than NYSE Composite. It trades about 0.12 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.15 per unit of risk. If you would invest 911,000 in Lotus Bakeries on February 16, 2024 and sell it today you would earn a total of 76,000 from holding Lotus Bakeries or generate 8.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
Lotus Bakeries vs. NYSE Composite
Performance |
Timeline |
Lotus Bakeries and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Lotus Bakeries
Pair trading matchups for Lotus Bakeries
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Lotus Bakeries and NYSE Composite
The main advantage of trading using opposite Lotus Bakeries and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Bakeries position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Lotus Bakeries vs. Brederode SA | Lotus Bakeries vs. Compagnie du Bois | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Sofina Socit Anonyme |
NYSE Composite vs. Monster Beverage Corp | NYSE Composite vs. Naked Wines plc | NYSE Composite vs. UbiSoft Entertainment | NYSE Composite vs. Constellation Brands Class |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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