Correlation Between Life Banc and E Split

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

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

Diversification Opportunities for Life Banc and E Split

0.93

Correlation Coefficient

Life Banc  E Split

Almost no diversification

The 3 months correlation between Life and ENS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Life Banc Split and E Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Split Corp and Life Banc 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 Life Banc Split are associated (or correlated) with E Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Split Corp has no effect on the direction of Life Banc i.e., Life Banc and E Split go up and down completely randomly.

Pair Corralation between Life Banc and E Split

Assuming the 90 days trading horizon Life Banc Split is expected to generate 1.17 times more return on investment than E Split. However, Life Banc is 1.17 times more volatile than E Split Corp. It trades about 0.19 of its potential returns per unit of risk. E Split Corp is currently generating about 0.06 per unit of risk. If you would invest  873.00  in Life Banc Split on August 17, 2024 and sell it today you would earn a total of  43.00  from holding Life Banc Split or generate 4.93% return on investment over 90 days.

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

Life Banc Split  vs.  E Split Corp

Life Banc Split

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Life Banc Split are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Life Banc displayed solid returns over the last few months and may actually be approaching a breakup point.

E Split Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, E Split displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Life Banc and E Split

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

The idea behind Life Banc Split and E Split Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.