Correlation Between L Brands and Energy Today
Can any of the company-specific risk be diversified away by investing in both L Brands and Energy Today 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 L Brands and Energy Today into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Brands and Energy Today, you can compare the effects of market volatilities on L Brands and Energy Today 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 L Brands with a short position of Energy Today. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Brands and Energy Today.
Diversification Opportunities for L Brands and Energy Today
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between L Brands and Energy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding L Brands and Energy Today in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Today and L Brands 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 L Brands are associated (or correlated) with Energy Today. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Today has no effect on the direction of L Brands i.e., L Brands and Energy Today go up and down completely randomly.
Pair Corralation between L Brands and Energy Today
If you would invest 2.00 in Energy Today on February 6, 2024 and sell it today you would earn a total of 0.00 from holding Energy Today or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
L Brands vs. Energy Today
Performance |
Timeline |
L Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Energy Today |
L Brands and Energy Today Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with L Brands and Energy Today
The main advantage of trading using opposite L Brands and Energy Today positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Brands position performs unexpectedly, Energy Today 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 Energy Today will offset losses from the drop in Energy Today's long position.L Brands vs. Eldorado Gold Corp | L Brands vs. Papaya Growth Opportunity | L Brands vs. Sun Life Financial | L Brands vs. Falcon Metals Limited |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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