Correlation Between IRobot and LG Display
Can any of the company-specific risk be diversified away by investing in both IRobot and LG Display 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 IRobot and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iRobot and LG Display Co, you can compare the effects of market volatilities on IRobot and LG Display 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 IRobot with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRobot and LG Display.
Diversification Opportunities for IRobot and LG Display
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IRobot and LPL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iRobot and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and IRobot 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 iRobot are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of IRobot i.e., IRobot and LG Display go up and down completely randomly.
Pair Corralation between IRobot and LG Display
Given the investment horizon of 90 days iRobot is expected to under-perform the LG Display. In addition to that, IRobot is 2.74 times more volatile than LG Display Co. It trades about -0.07 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.04 per unit of volatility. If you would invest 415.00 in LG Display Co on January 26, 2024 and sell it today you would lose (10.00) from holding LG Display Co or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iRobot vs. LG Display Co
Performance |
| Timeline |
| iRobot |
| LG Display |
IRobot and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRobot and LG Display
The main advantage of trading using opposite IRobot and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRobot position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| IRobot vs. Tempur Sealy International | IRobot vs. La Z Boy Incorporated | IRobot vs. Purple Innovation | IRobot vs. MasterBrand |
| LG Display vs. VOXX International | LG Display vs. Vizio Holding Corp | LG Display vs. Turtle Beach Corp | LG Display vs. Emerson Radio |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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