Correlation Between LAMB and Enjin Coin
Can any of the company-specific risk be diversified away by investing in both LAMB and Enjin Coin 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 LAMB and Enjin Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMB and Enjin Coin, you can compare the effects of market volatilities on LAMB and Enjin Coin 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 LAMB with a short position of Enjin Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMB and Enjin Coin.
Diversification Opportunities for LAMB and Enjin Coin
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LAMB and Enjin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LAMB and Enjin Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjin Coin and LAMB 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 LAMB are associated (or correlated) with Enjin Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjin Coin has no effect on the direction of LAMB i.e., LAMB and Enjin Coin go up and down completely randomly.
Pair Corralation between LAMB and Enjin Coin
Assuming the 90 days trading horizon LAMB is expected to under-perform the Enjin Coin. In addition to that, LAMB is 1.32 times more volatile than Enjin Coin. It trades about -0.27 of its total potential returns per unit of risk. Enjin Coin is currently generating about -0.29 per unit of volatility. If you would invest 51.00 in Enjin Coin on January 20, 2024 and sell it today you would lose (18.00) from holding Enjin Coin or give up 35.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAMB vs. Enjin Coin
Performance |
| Timeline |
| LAMB |
| Enjin Coin |
LAMB and Enjin Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAMB and Enjin Coin
The main advantage of trading using opposite LAMB and Enjin Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMB position performs unexpectedly, Enjin Coin 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 Enjin Coin will offset losses from the drop in Enjin Coin's long position.The idea behind LAMB and Enjin Coin 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.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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